Russell 2000, $IWM Showing Technical Risks + Option Activity Update ($RUT)

Continued from my previous post showing technical weakness on the Dow Transports ($IYT ETF). It looks like $RUT (Russell 2000 Small Cap Index) broke, or should I say pierced, through the 50 day moving average and is testing a minor shelf from August and the lows of early October of about $580. If the 50dma breakdown follows through, RUT could test $535. Btw, Hang Seng (Hong Kong) is currently down 1.59% overnight.


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Same with the $IWM etf. It clearly broke below the 50dma, long wedge support and it is testing a minor shelf (from Aug highs). Volume has been higher on red days as well. It could head toward $53 if weakness persists. MACD is around zero (0.12) and RSI is at 56 so IWM must see an upside catalyst to at least attempt a triple top, $63 re-test.


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A quick look at the IYT options at SchaeffersResearch.com. The near term put/call open interest ratio has been volatile. IWM put/call open interest was over 2.40 at the end of September and it tanked to 1.72 today. What's even more crazy is the IWM put/call volume ratio which is at 2.27. It hit 2.63 right before the crash of 2008 and when the market bottomed out in March 2009 the p/c volume ratio hit 1.33. So put/call volume has correlated directly with this massive rally which is interesting. $IWM implied volatility, or the schaeffer implied volatility index, has been in a channel since August between .25 and .32. Volatility could test .30s but it is still relatively low from 9 months ago, so... We'll see if there is really fear underlying this market. As always, hedge according.ly.

Related:
每日看盘：大盘短期趋势处于转折点 (易富网, stock.eefoo.com)
Keeping Eye on the Russell 2K and the Transports (Chart Addict, iBankCoin.com)
Russell 2000 faces technical risk (OptionMonster, 10/27)
Keep an Eye on Small-Caps and Transports (RealMoney.com, 10/26)