IWM On our update dated Dec 20, 2021 the DJIA level of 34,000 was highlighted as a key level that would trigger a deep dive back toward the origins of Covid Rally that started in March 2020 @ 18,200, equalling about of a 50% drop. Since that update the Dow ran straight up, never threatening a break below 34,000. It reached a high of 36,952 on January 5th. This first week of 2021 saw the index lose about 300 points and it is still a long way from breaking below 34,000. The broader market, specifically IWM and QQQ, have not been so lucky. In particular, IWM is setting up a tantalizing drop off the cliff pattern that we can use for a bearish omen without having to wait for Dow 34,000. As is so often the case, a picture is worth 1,000 words ( or in this case, 2,231 Dow points). Support going back to January 2021 has been tested repeatedly at IWM 212; in March, May, July and December. If there is going to be a bear market of anything approaching 50% it will have to start with IWM dropping below 212...and then staying below. The strategy is to use IWM 210 as an "all-in on the short side" trigger. By all in on the short side I mean additional positions in any or all of the stock market indices via puts in IWM, QQQ, SPY or DIA, and periodically going into shorter-term calls on UVXY and SQQQ. If IWM does not breach this key level in the next few weeks, we will reassess, but for now IWM 210 is our call to arms that something massive on the downside is imminent and in fact had already started. It's in the chart and will manifest in the anticipated price action; an opportunity for exponential returns in index puts. While we wait, the operative trend is down from this fresh IWM Sell Signal from the 180 minute trend model on Thursday: TSLA A failure for IWM (and the rest of the market) to break-down would be nothing but good news for TSLA, making any price weakness a buying opportunity. In the event of the aforementioned market decline two windows of trading profits will be opening: (1) First, massive returns on index puts, and, (2) Second, the decline in TSLA (let's not fool ourselves, TSLA too would be a casualty of any bear market) will end with a price low from which will launch a triple digit plus return in the shares, and a return of exponential gains in TSLA calls. In a perfect world, mega gains in index puts in a declining market will then be put to work to generate mega gains in what should be a run of historic proportions in the leading technology, green energy and global transportation company of the decade. In a less than perfect world, one out of two will do just fine. SQQQ This is a highly leveraged QQQ inverse ETF that we trade in the PRO Service. It's chart below is approaching a key triple top level at about $7.00. But I don't believe in triple tops - if a double top doesn't send the stock back down for good, the third attempt at the breakout is likely to be successful. As a market strategy it's not always perfect, but other than a Model Y, what is? QQQ: The Uh-oh moment Let's end this weekend update with this one chart that sums up all that was said above about the stock market with these words: Either Nasdaq (QQQ) finds support and reverses higher right here, right now, or IWM 210 is toast.
