As the $IWM disconnected from the $SPY today I posted a tweet with the following daily $ES chart with $ES at 1808.15 suggesting a short trade with a stop above. Why?
Simply the $ES had moved under the daily trend line and was in the process of retesting it with $IWM off over 0.5% indicating a large divergence.
Interestingly enough many seemed little bothered and kept on buying $SPY for a bit despite the glaring divergence, but not for long. Eventually the pattern was confirmed and we had a nice breakdown giving us downside acceleration.
Here’s how the chart played out on the 15 min chart with my short price entry indicated by the red horizontal line. Those that followed into the trade got a very nice return either in options or futures. Per my post over the weekend we are now likely entering the corrective phase. A close below the 5 EMA and 8 MA is a solid first step which paves the move toward a 21 MA test. Note also $VIX moved higher nicely per the weekend chart.
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