M2KM2019 trade ideas
Russell 2000 Index: Bullish Breakout Indicates Further GrowthRussell 2000 Index: Bullish Breakout Indicates Further Growth
The Russell 2000 index has completed an unusual variation of an Inverse Head & Shoulders pattern, suggesting further growth.
It just broke out from the neckline of the pattern, showcasing increased bullish momentum.
The broader trend remains bullish and intact.
The US elections may support this growth, at least in the short-term.
You may find more details in the chart!
Thank you and Good Luck!
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Daily Resistance Holds Strong: RTY1 Rejected AgainRTY1 attempted to break through a key daily resistance level but failed, signaling potential weakness in bullish momentum. Watch for a possible retracement toward support zones or consolidation before the next attempt.
M2K Long 10/30/2024M2K is in an uptrend. But price closed below 4hr MA. It is the strongest equity. Placed a long position in 1hr HV DZ which coincides with 4hr 200EMA. Taking half risk because the zone has been tested. Risk= $120. Target= 1:1 and 3:1. Waited for the Globex open.
RTY Long 10/28/2024RTY is in an uptrend. Starting of a trend. Didn't find quality zone. Placing a long position in HV DZ. It is far from price. Chances of getting filled is less. That's the best setup I find in this instrument. Risk= $250. Target= 1.1 from entry.
NAVIGATOR Support/resistance in real time [/urlSick and tired of lagging indicators? Sick and tired of the repainting? Wondering where to enter or exit? Blue ribbons are SET in stone at market open (RTH) and do not move through out the day to give you a "guide". Grey support/resistance zones are evolving thought the day as the markets are ever changing EVERYTHING is a mathematical..... why not trade off of mathematical areas or zones? So many trade opportunities its not even funny. Wether youre a scalper or long term intra-day trader this system just works with clear and defined areas of interest. Let the NAVIGATOR show you the way
Russell 2000 Rejects Demand Zone: Is It Time for Bullish Season?The Russell 2000 Index, a benchmark for small-cap stocks, is showing signs of a potential bullish reversal after testing a previous demand area. While many retail traders are still positioned for further downside, current market conditions suggest a possible contrarian opportunity for a long position.
Demand Area Rejection and Retail Sentiment
The Russell 2000 has recently encountered a strong demand zone that has historically acted as a reliable support area. The index's initial rejection from this level indicates potential buying interest, which could pave the way for an upward move. However, retail traders remain predominantly bearish, anticipating a continuation of the downtrend. This positioning often suggests that the majority expects more selling pressure, which could lead to a squeeze in the event of a reversal.
Why the Long Setup?
Contrarian Approach: When the majority of retail traders lean toward one side of the market, it often creates an opportunity to take a contrarian stance. With retail sentiment heavily skewed towards further downside, a long setup becomes increasingly appealing.
Historical Seasonality: Historical data over the past decade suggests a pattern of upward price movement for the Russell 2000 during this time of the year. The index has experienced notable gains in the fourth quarter in nine of the last ten years. This seasonal trend aligns well with the current technical setup, providing further confidence in a potential bullish move.
The Technical Picture
From a technical perspective, the Russell 2000 has shown resilience at the current demand zone, suggesting that buyers are stepping in. For a confirmed long setup, traders should watch for bullish candlestick patterns, such as an engulfing or hammer formation, on the lower timeframes or even the daily chart. This would provide confirmation that the reversal is underway.
Let’s see how the index performs over the next few sessions. Keep an eye on key levels, and feel free to share your thoughts in the comments!
Russell 2000 Futures Ascending Triangle (15m)Ascending Triangle breakout will lead to further breakouts into ATHs with price targets of:
- 2337
- 2615 (ATH)
- +++
SL would be a breakdown of the triangle and rejection to reenter the pattern, although bullish structure could remain in place
US small cap breakout sets scene for run to record highsRussell 2000 futures closed at cycle highs on Wednesday, benefitting apparently from optimism Donald Trump will win the Presidential election. That may be so, but for the US small cap space, technical signals often come across as far more important when it comes to directional risks than any fundamental factor.
The latest rally was sparked by a break of downtrend resistance, sending futures surging through the downtrend running from the 2024 highs set in late July. While some may not put much weight on it as it was only established last month, running from two cyclical peaks, the downtrend comes across as decent level to build a long setup around.
Traders could buy above the downtrend with a tight strop below, initially targeting 2320.6. For the trade to stack up from a risk-reward perspective, we’d need to see a push towards 2378.3 or 2460.8, the latter coinciding with the record highs set in the early stages of the pandemic.
Momentum indicators continue to generate bullish signals, adding to the base to buy dips or breakouts.
Good luck!
DS
US small caps coiling again following bullish breakout Traders should be alert for a breakout in Russell 2000 futures which are coiling in yet another triangle pattern. Having entered from below and with three consecutive higher closes, it feels like if there’s going to be a breakout, it’s most likely going to be bullish. Momentum indicators are pushing higher, bolstering that view.
If we see triangle resistance give way, consider buying the break with a stop beneath the level for protection. The initial target would be 2305, the high struck on September 19.
Another option would be to wait for a potential retest of triangle support. If the price were to bounce from it again, you could buy with a tight stop below for protection. Targets include triangle resistance and 2305.
Prospects for both setups would likely improve if accompanied by signs of further modest easing US labour market conditions, allowing for the Fed to cut interest rates without sparking renewed fears about demand or the broader economy.
Therefore, the JOLTS survey and ISM manufacturing PMI out later Tuesday could be very influential on the performance of small caps during the session.
Good luck!
DS
M2K: SmallCap May Get a Big Lift with Rate Cuts UnderwayCME: Micro E-Mini Russell 2000 Futures ( GETTEX:M2K )
Global financial market orbits around Federal Reserve’s interest rate decisions. Hiking interest rates means monetary tightening while cutting them signals easing.
In the past three years, we have witnessed a full cycle of Fed hikes and now its reversal.
• In March 2022, as inflation rose rapidly, the Fed started a series of rate increases, pushing the Fed Funds rate up by 525 basis points from 0-0.25% to 5.25-5.50%.
• In September 2023, after 11 consecutive rate hikes, the Fed put the brake on. It kept the Fed Funds unchanged for a full year in eight FOMC meetings.
• Last Wednesday, the Fed finally entered the long-awaited rate cut cycle. It slashed interest rates by a supersized half point, or 50 basis points, in its first cut since 2020.
According to the Bureau of Labor Statistics (BLS), the latest reading of headline CPI is 2.5% in August, down 6.6% from its peak in July 2022. We may conclude that the Fed has largely completed its mission of combating inflation.
The BLS data shows that the U.S. unemployment rate has risen to 4.2% in August 2024 from 3.6% two years ago in August 2022. Fed’s easing signals its pivot to the second mandate, to support full employment. Lowering interest rates could reduce borrowing costs, and in return help business expansion and employment.
Russell 2000: SmallCap may get the biggest Boost
The discounted cash flow (DCF) model estimates the present value of an investment based on its expected future cash flows. A lower cost of capital (CoC) shall cause the price of the investment to go up, other things equal.
Small companies would gain the most compared to larger corporations. In the preceding rate hike cycle, they were hit hard as credit standards got tightened and credit spreads expanded. We will now see the reversal.
Russell 2000 is the benchmark stock market index for US small companies. CME Micro E-mini Russell 2000 futures ( GETTEX:M2K ) were settled at 2,252.6 on Friday, up 10.05% year-to-date.
For a comparison, the S&P 500 gained 19.50% YTD as of Friday, while the Nasdaq 100 was up 17.59%. In my opinion, the major stock indexes rose on the back of the AI-driven technological breakthroughs, where Big Tech dominated but few Small Cap companies could benefit. In this new cycle, lowered borrowing costs and the abundance of credit could help small businesses improve their balance sheets.
The Fed is expected to continue cutting rates in the next two years. Corporate bond yields could likely return to the 2-3% range. The credit spreads, including Baa-Bbb, Baa-Bb, and Baa-Ccc, would likely get smaller. This could bring further boost to the Russell index.
Could we quantify the impact of rate cuts? Let’s illustrate this with a $1 million payment, to be received in five years.
• Applying the BBB corporate bond yield of 4.88% as the CoC, present value of $1 million will be $788,019.
• If the CoC moves down by 250 bps to 2.38%, the PV will be increased to $889,046.
• This shows that a 2.5% reduction in CoC could boost the PV by 12.8%.
The same concept would work on the Russell index. CoC could drop either due to interest rate decrease or because of the narrowing of credit spread, which favors smaller companies. The result would be an increase in the market value of Russell component companies.
For someone with a bullish view of the Russell 2000, he could establish a long position in CME Micro E-mini Russell 2000 futures. The contract has a notional value at $5 times the index. At Friday closing price of 2,252.6, each December contract (M2KZ4) is worth $11,263. CME Group requires an initial margin of $760 for each M2K contract, long or short.
The Fed will next convene on November 5th-6th and meet one last time in 2024 on December 17th-18th. In my opinion, if the Fed continues lowering rates in these two meetings, Russell 2000 could likely move up further.
Hypothetically, if the Russell is 5% higher by December, the 113-point increase would translate into $563 (=2252.6*0.05*$5) gain per contract for the long holder.
The risk of long futures is the index going down. If inflation spikes unexpectedly, the Fed could possibly pause its rate cuts, casting doubt on the future rate trajectory. For more experienced traders, put options on the E-Mini Russell 2000 futures could be deployed to hedge the downside risk.
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
RTY BreakoutRTY has had a couple of down trend breaks in a row now as it builds strength heading into FOMC. Really nice break and retest on both trendlines shown here, great long opportunity this morning. I would expect RTY to rally into FOMC unless it breaks back below the trendline where I may look for shorts on a retest.
To the upside I have two supply zones, final target is around 2280. It may or may not hit before FOMC. What happens after that is not worth betting on IMO, but it may be a good run up into the event.
M2K! Here on the 1D , We have a previous imbalance. Aligned with the 0.71 fib level. Expecting to turn and see the end of this correction.
Entry @ : 2067.1
Stop @ : 1993.1
Take profit @ : 1819
$RUTSeptember will likely determine the market's direction for the rest of the year. Key U.S. economic indicators, such as the Consumer Price Index (CPI) and unemployment rates, released in the first couple of weeks of September, will provide more confidence to investors. Currently, the market is pricing in a potential rate cut on September 18.
Positive economic news is likely to encourage risk-on behavior, which could be particularly evident in U.S. small-cap companies and may spill over into traditionally riskier markets like cryptocurrencies. Historically, rate cuts have led to very short-term risk-on behavior before major drops in global indices.
Russell 2000 - COT Based Strategy Suggests Downside AheadDISCLAIMER: This is not trade advice. This is for educational purposes only to demonstrate how I am looking to participate in this market. There is significant risk involved in trading, do your own homework and due diligence.
COT Strategy
SHORT
Russell 2000 (RTY)
My COT strategy has me on alert for short trades in RTY if we get a confirmed bearish change of trend on the Daily timeframe.
COT Commercial Index: Sell Signal
Valuation: Overvalued VS Treasuries
True Seasonal: Strong seasonal tendency for equities to go down in September
COT Small Spec Index: Sell Signal
Supplementary Indicators: POIV & UO Sell Signals
Remember, this is not a "Short Now" idea. These indicators are not timing tools. They simply tell us that this market could have a move of some significance to the downside, which we will participate in with a confirmed Daily trend change to the downside.
Good luck & good trading.
Nvidia’s pain may be the Russell 2000s gainNvidia’s pain may be the Russell 2000s gain, if sentiment towards the US economic outlook holds up. The rotation of capital out of AI names has to go somewhere, and as we’ve seen over recent months, that’s often been into US small cap stocks which trade at substantially lower valuations.
While the price action since Jerome Powell’s speech last Friday hasn’t been convincing, with much of the 3%-plus gains unwound in the last three sessions following a bearish pin and pattern that some may describe as three crows, it’s notable the unwind stalled at 2186.4, an obvious horizontal support dating back to the middle of July.
If risk sentiment holds up during the session, which is likely to be determined not by Nvidia but incoming US economic data such as jobless claims and second read of Q2 GDP, near-term upside is favoured over downside.
Traders could buy here or wait for pullbacks towards 2186.4 and place a stop below the level for protection. The initial trade target would be 22493.3 with 2320.5 the next after that.
Good luck!
DS
Good R:R opportunity on RTYPlenty of room up to 2271 still. If we see a break above 2231 on the hourly and then form a HL we will likely see an uptrend continuation to 2271.
Russell may rock n’ roll on rate cut and soft landing hopesRussell 2000 futures sit on uptrend support, making Friday’s close important following Jerome Powell’s speech at Jackson Hole.
To get excited about US small caps, you need a soft economic landing and lower borrowing costs given many of its constituents are unprofitable and reliant on capital markets. Given Powell will discuss rate cuts and flag confidence in the Fed’s ability to stick a soft landing, it comes across as recipe for upside.
With the uptrend nearby, traders could initiate longs around these levels or even a touch lower with a stop loss below the level for protection. Should the price break 2186.4, there’s little in the way of visible resistance until the record highs.
If the trade works in your favour, consider raising you stop to entry level or higher, providing a free hit on upside. Good luck!
DS
RTY Bear FlagI posted a bullish idea for RTY earlier based on a horizontal support level, but after reviewing more I think this might actually end up bearish. Nice bear flag here on the 4hr, so I'd say that makes it more likely to break. I have demand near 2100 I'd use as a first target for shorts.
RTY Support Test Long IdeaRTY is an interesting spot here, I'd expect bulls to hold the area on at least one retest. If not, I think it could be a great short if it breaks below and retests.
First upside target for me is 2175, downside is 2100 if it can break below 2130ish.
Determining Which Equity Index Futures to Trade: ES, NQ, YM, RTYWhen it comes to trading equity index futures, traders have a variety of options, each with its own unique characteristics. The four major players in this space—E-mini S&P 500 (ES), E-mini Nasdaq-100 (NQ), E-mini Dow Jones (YM), and E-mini Russell 2000 (RTY)—offer different advantages depending on your trading goals and risk tolerance. In this article, we’ll dive deep into the contract specifications of each index, explore their volatility using the Average True Range (ATR) on a daily timeframe, and discuss how these factors influence trading strategies.
1. Contract Specifications: Understanding the Basics
Each equity index future has specific contract specifications that are crucial for traders to understand. These details affect not only how the contracts are traded but also the potential risks and rewards involved.
E-mini S&P 500 (ES):
Contract Size: $50 times the S&P 500 Index.
Tick Size: 0.25 index points, equivalent to $12.50 per contract.
Trading Hours: Nearly 24 hours with key sessions during the U.S. trading hours.
Margin Requirements: Change through time given volatility conditions and perceived risk. Currently recommended as $13,800 per contract.
E-mini Nasdaq-100 (NQ):
Contract Size: $20 times the Nasdaq-100 Index.
Tick Size: 0.25 index points, worth $5 per contract.
Trading Hours: Similar to ES, with continuous trading almost 24 hours a day.
Margin Requirements: Higher due to its volatility and the tech-heavy nature of the index. Currently recommended as $21,000 per contract.
E-mini Dow Jones (YM):
Contract Size: $5 times the Dow Jones Industrial Average Index.
Tick Size: 1 index point, equating to $5 per contract.
Trading Hours: Nearly 24-hour trading, with peak activity during U.S. market hours.
Margin Requirements: Relatively lower, making it suitable for conservative traders. Currently recommended as $9,800 per contract.
E-mini Russell 2000 (RTY):
Contract Size: $50 times the Russell 2000 Index.
Tick Size: 0.1 index points, valued at $5 per contract.
Trading Hours: Continuous trading available, with key movements during U.S. hours.
Margin Requirements: Moderate, with significant price movements due to its focus on small-cap stocks. Currently recommended as $7,200 per contract.
Understanding these specifications helps traders align their trading strategies with the right market, considering factors such as account size, risk tolerance, and market exposure.
2. Applying ATR to Assess Volatility: A Key to Risk Management
Volatility is a critical factor in futures trading as it directly impacts the potential risk and reward of any trade. The Average True Range (ATR) is a popular technical indicator that measures market volatility by calculating the average range of price movements over a specified period.
In this analysis, we apply the ATR on a daily timeframe for each of the four indices—ES, NQ, YM, and RTY—to compare their volatility levels:
E-mini S&P 500 (ES): Typically exhibits moderate volatility, offering a balanced approach between risk and reward. Ideal for traders who prefer steady market movements.
E-mini Nasdaq-100 (NQ): Known for higher volatility, driven by the tech sector's dynamic nature. Offers larger price swings, which can lead to greater profit potential but also increased risk.
E-mini Dow Jones (YM): Generally shows lower volatility, reflecting the stability of the large-cap stocks in the Dow Jones Industrial Average. Suitable for traders seeking less risky and more predictable price movements.
E-mini Russell 2000 (RTY): Exhibits considerable volatility, as it focuses on small-cap stocks. This makes it attractive for traders looking to capitalize on significant price movements within shorter time frames.
By comparing the changing ATR values, traders can gain insights into which index futures offer the best fit for their trading style—whether they seek aggressive trading opportunities in high-volatility markets like NQ and RTY or more stable conditions in ES and YM.
3. Volatility and Trading Strategy: Matching Markets to Trader Preferences
The relationship between volatility and trading strategy cannot be overstated. High volatility markets like NQ and RTY can provide traders with larger potential profits, but they also require more robust risk management techniques. Conversely, markets like ES and YM may offer lower volatility and, therefore, smaller profit margins but with reduced risk.
Here’s how traders might consider using these indices based on their ATR readings:
Aggressive Traders: Those who thrive on high-risk, high-reward scenarios might prefer NQ or RTY due to their larger price fluctuations. These traders are typically well-versed in managing rapid market movements and can exploit the volatility to achieve significant gains.
Conservative Traders: If stability and consistent returns are more important, ES and YM are likely better suited. These indices provide a more predictable trading environment, allowing for smoother trade execution and potentially fewer surprises in market behavior.
Regardless of your trading style, the key takeaway is to align your strategy with the market conditions. Understanding how each index's volatility affects your potential risk and reward is essential for long-term success in futures trading.
4. Conclusion: Making Informed Trading Decisions
Choosing the right equity index futures to trade goes beyond personal preference. It requires a thorough understanding of contract specifications, an assessment of market volatility, and how these factors align with your trading objectives. Whether you opt for the balanced approach of ES, the tech-driven dynamics of NQ, the stability of YM, or the volatility of RTY, each market presents unique opportunities and challenges.
By leveraging tools like ATR and staying informed about the specific characteristics of each index, traders can make more strategic decisions and optimize their risk-to-reward ratio.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
US small cap bounce unconvincing despite risk revival The recovery in US small caps has been unconvincing over the past fortnight, struggling for upside unlike mega-cap rivals. Russell 2000 futures have been capped below the 50-day moving average for much of this period, running into sellers constantly above this level. Wednesday’s rejection above 2132.6 warns of building reversal risk, putting a potential break of uptrend support on the cards should US slowdown fears return.
If the price were to break the uptrend, traders could enter shorts with a tight stop either above the level or the 50-day moving average for protection, depending on your target. On that subject, the 200-day moving average or 1920 are levels to consider. If the price were to hold the uptrend, a close above the 50-day moving average would negate the bearish setup.
MACD and RSI continue to generate bearish signals on momentum, making selling rallies the preferred strategy near-term. Good luck!
DS
RTY Short IdeaRTY hard rejected after its breakout above the 2100 area. Now it is almost back down to the bottom end of the wedge. I'd expect a break to the downside and a test of demand around 2k relatively soon unless it does end up breaking out above 2100 again and sustains.
I see that fakeout as highly bearish and I'm already bearish on the market anyway so this seems like a good short candidate to me. If either of these paths play out, I'd look for IWM puts on the arrows.
