Russell 2000 Small Caps Weakening (TZA)


The Russell 2000 has been making lower highs since February 3rd.  Unlike other indexes the Russell has not been able to advance lately.  The index looks tired and due to retreat.

Let's keep it simple.  The combination of lower highs, and also a backtest of the trend line going back to December looks bearish.  Often the Russell 2000 Small Caps top before other indexes, and lead.  In this case they have been leading down since the early days of February.

Under these circumstances a decline is to be expected next. 

So, yes. If you expect the Russell to go down, you would buy TZA. Keep in mind it moves appx 3 times whatever the Russell does.

Looks like risk-off is here, just look at the divergence in the Nasdaq today. Tech selloff = risk-off

Absolutely agree, the weaker Nasdaq 100 today is a red flag for next week.  A selloff into Fri Feb 24th or Mon the 27th looks probable from my timing cycles.  Let's see.

arguably, the majority of your data points in this decline are forming a bull flag that broke higher today, with horizontal support going back to the first week of February is holding.   Going back to the October low, if you were to connect the majority of data points, the trend is still intact having been touched at the low today. Whereas your primary trend from December has been broken the longer trend has not, nor has horizontal support.  Also, today's volume was greater than yesterday's (down day) volume.  

Fair enough, but nevertheless signs of cracks are appearing.  It is pricey up here, and it is getting risky at these levels.  A dip next week is quite likely from my work. 

So to play the Russel retreat, we get TZA? Please clarify..

TZA is the small cap bear 3x ETF.