The markets finished the week in an ugly fashion today, and we continue to think there’s more downside to come heading into March and April.
Our major focus on the short side has been the IWM (Russell ETF), and we initiated the first half of our short position this week on the bounce on Thursday.
Looking at the weekly chart, we can see that IWM traded sideways for most of 2022. Just recently we have seen the break of support with the move under $210. On the bounce this week, previous support proved to be resistance and we opened our short position, catching a nice dump into the close on Friday.
Our downside target into March and April is $170, and that’s where we’ll aim to take profits over the next handful of weeks. Currently we’re risking 5% of our accounts on a March expiration in-the-money (ITM) call credit spread. We’d like to add another 5% of risk, bringing the total potential return to around 50% to 60%.
The next few weeks shall not be dull, and until things change, our focus will be on getting positioned for the next leg to the downside in IWM and other good looking setups!
Stay Focused!