{"id":4094,"date":"2014-08-07T03:46:29","date_gmt":"2014-08-07T07:46:29","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=4094"},"modified":"2014-08-07T18:17:36","modified_gmt":"2014-08-07T22:17:36","slug":"momentum-trades-iwm-wbai","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/momentum-trades-iwm-wbai\/","title":{"rendered":"2 Momentum Trades Setting Up For Potential Buy Entry Now ($WBAI $IWM)"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-4097 size-full\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2014\/08\/momentum-e1407397345330.jpg\" alt=\"momentum\" width=\"300\" height=\"225\" title=\"\">In yesterday&#8217;s blog post, I said my\u00a0<a title=\"Read post on blog\" href=\"https:\/\/www.morpheustrading.com\/blog\/where-is-nasdaq-support\/\" target=\"_blank\">market timing model has just shifted from &#8220;buy&#8221; to &#8220;neutral,&#8221;<\/a> due to continued institutional selling and weakening of the major indices.<\/p>\n<p>This means I am now laying low with regard to new swing and core trade entries.<\/p>\n<p>Nevertheless, I have\u00a0just spotted two very short-term momentum trade setups (one ETF and one individual stock) that <i>could be<\/i> in play over the next few days, both\u00a0of which provide relatively low-risk buy entry points.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/momentum-trades-iwm-wbai\/#500com_WBAI\" >500.com ($WBAI)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/momentum-trades-iwm-wbai\/#Russell_2000_ETF_IWM\" >Russell 2000 ETF ($IWM)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/momentum-trades-iwm-wbai\/#%E2%80%9CGONG%E2%80%9D_Setups\" >&#8220;GONG&#8221; Setups<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/momentum-trades-iwm-wbai\/#Keep_It_Tight\" >Keep It Tight!<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"500com_WBAI\"><\/span>500.com ($WBAI)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One potential momentum trade setup going into today is Chinese Internet stock<em> <a title=\"Overview of 500.com\" href=\"https:\/\/www.nasdaq.com\/markets\/ipos\/company\/500com-ltd-918353-73781\" target=\"_blank\" rel=\"noopener\">500.com ($WBAI)<\/a><\/em>.<\/p>\n<p>This trade setup looks pretty good for a <strong>quick 2-5 day trade<\/strong> ahead of its quarterly earnings report (scheduled for August 11).<\/p>\n<p>As shown on the daily chart below, the buy entry is above the tight price action of the three-day high of $39.37 (solid volume should accompany such a move), with a protective stop just below Wednesday&#8217;s low ($37.50 area).<\/p>\n<p>The <strong>stop price needs to be tight<\/strong> because of the limited number of days ahead of its earnings report:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-4095\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2014\/08\/140807WBAI-e1407396442615.png\" alt=\"140807WBAI\" width=\"800\" height=\"677\" title=\"\"><\/p>\n<p>Overall, Chinese stocks and ETFs have been holding up well, but these stocks will eventually fold if the US market continues to struggle because most<strong> Chinese ETFs are still range bound<\/strong> on their monthly charts, and have been for quite some time.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Russell_2000_ETF_IWM\"><\/span>Russell 2000 ETF ($IWM)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Another possible momentum setup is\u00a0<em>iShares Small-Cap Russell 2000 ETF ($IWM)<\/em>, which\u00a0printed a decent bullish reversal candle on August 4, but has not yet followed through to the upside (each of the past two sessions stalled above the prior day&#8217;s highs).<\/p>\n<p>However, a close above Wednesday&#8217;s high, which converges with the downtrend line from the July 1 high, could still spark a <strong>short-term pop up to the $114 &#8211; $115 area.<\/strong><\/p>\n<p>This potential momentum trade setup is shown on the daily chart of iShares Russell 200 ETF ($IWM):<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-4096\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2014\/08\/140807IWM-e1407396622939.png\" alt=\"140807IWM\" width=\"800\" height=\"677\" title=\"\"><\/p>\n<p>A potential buy entry point in $IWM is above yesterday&#8217;s high and above the downtrend line (around $112.75).<\/p>\n<p>Consider a protective stop about 1 &#8211; 1.25 points below that level.<\/p>\n<p>Since there is major resistance of the 50-day moving average just above $115, <strong>don&#8217;t expect to stay in this trade more than a few days<\/strong> (if it triggers for entry).<\/p>\n<p>With a potential reward of just over 2 points, combined with 1 point of risk, this setup still provides you with a decent reward-risk ratio of better than 2:1 (just over 2 points reward with 1 point risk).<\/p>\n<h2><span class=\"ez-toc-section\" id=\"%E2%80%9CGONG%E2%80%9D_Setups\"><\/span>&#8220;GONG&#8221; Setups<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Given recent market conditions, it&#8217;s important to understand that both trade setups above ($IWM and $WBAI) should be treated as <strong>quick, momentum-based &#8220;GONG&#8221; (go or no go) trades.<\/strong><\/p>\n<p>Since most of our &#8220;official&#8221; swing trade setups are intended to have longer holding periods of at least a few weeks, neither $IWM or $WBAI are listed as &#8220;official&#8221; setups on today&#8217;s <strong><a href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"nofollow\"><i>Wagner Daily<\/i><\/a><\/strong> watchlist.<\/p>\n<p>Further, both of these trade setups should only be considered by intermediate-level traders who are<strong> comfortable getting in and out of positions<\/strong> quickly in a volatile market.<\/p>\n<p>Above all, be sure to <strong>avoid <a title=\"Danger of jumping the gun in trading\" href=\"https:\/\/www.morpheustrading.com\/blog\/danger-jumping-the-gun-trading-psychology\/\" target=\"_blank\">jumping the gun<\/a> by entering a trade before it moves<\/strong> above the actual resistance (buy trigger point).<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Keep_It_Tight\"><\/span>Keep It Tight!<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>When market conditions are not ideal, tight protective stop orders are a MUST!<\/p>\n<p>Most traders have a tendency to do the opposite by widening their stops in a bad market.<\/p>\n<p>When conditions are ideal, wider stops make sense because a stock can have a bad day and still recover quickly.<\/p>\n<p>But in a weak or weakening market, stocks do not recover as well and can melt down in a hurry.<\/p>\n<p>As such,<strong> it pays to run with tight stops on all trades right now<\/strong> (unless you are holding an intermediate-term position with a large profit buffer and do not mind giving back some gains).<\/p>\n<p>Overall, the main stock market indexes appear to be oversold in the short-term, but stocks could easily see more downside if Wednesday&#8217;s lows are broken.<\/p>\n<p>Because of this, I would <em>not<\/em> look to establish more than a few long positions (at most) at low-risk entry points (and with very small position size to further minimize risk).<\/p>\n<div class=\"cfmonitor\" style=\"padding-top: 30px;\"><center><script src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\" async=\"\"><\/script><!-- Footer of content - Large --> <ins class=\"adsbygoogle\" style=\"display: inline-block; width: 336px; height: 280px;\" data-ad-client=\"ca-pub-7565144363001883\" data-ad-slot=\"6017996961\"><\/ins><script>\/\/ <![CDATA[\n(adsbygoogle = window.adsbygoogle || []).push({});\n\/\/ ]]><\/script><\/center><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In yesterday&#8217;s blog post, I said that our market timing model has just shifted from &#8220;buy&#8221; to &#8220;neutral,&#8221; due to continued institutional selling and weakening of the major indices. This means we are now laying low with regard to new swing and core trade entries. Nevertheless, we have just spotted two very short-term momentum trade setups (one ETF and one individual stock) that could be in play&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[5],"tags":[],"class_list":["post-4094","post","type-post","status-publish","format-standard","hentry","category-stock-picks-analysis"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4094","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=4094"}],"version-history":[{"count":0,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4094\/revisions"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=4094"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=4094"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=4094"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}