The small-cap Russell 2000 has been making new all-time highs for the last few trading days. So what made me pull the trigger on a short on Thursday? The answer is simple: If you connect the high pivot from December 2016 to January 2018, the trend line extends out to the current all-time high made Thursday morning on IWM (Russell 2000 ETF). Each of these high pivots has seen a pullback, each one greater than the last. Using this technical trend line and rationale, IWM is due to pull back here, which should be even larger than its retreat in late January 2018.
The downside target could be $150 or even $135 in the coming months. With the cycle date looming for later in June and lasting until mid August, look for the top to be here with chop, then big downside between that time frame.
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