Sometimes, traders can actually find bigger gain opportunities from smaller stocks in the US market.
Smaller stocks tend to be focused on US customers and market segments, which insulates them from currencies, including the stronger US dollar, as well as global economic challenges, as the US is currently setting up to be one of the better performing economies on the planet.
Recently, the Russell 2000 Index has been outperforming the large-cap focused S&P 500 Index by more than two to one since May 13 through today.
And with that, I have a trade opportunity shaping up this week for the Russell 2000 Index futures contract (RTY) that I want to share with you today.
So, here’s how the trade is shaping up this week and how I see smaller stocks potentially setting up for bigger gains for you.
Russell 2000 Index Trade Setup
Here’s how the chart is moving this week…
And here’s how I see the trade shaping up…
The Russell 2000 (RTY) one hour time frame is in an up trend. The market just finished extending to form a high price and is showing evidence of a short term bear pullback towards the up trend line.
It will be a good idea to wait for a lower price near the up trend line before looking for long ideas.
Entry: Counter trend line break bullish in the buy zone.
Stop: 1,718.40
Limit: 1,930.20
As long as the market stays above the up trend line, it will be a good idea to turn to the
five minute time frame and to look for Tunnel Trader long / Destination Trader long ideas.
The Bottom Line
For more on the markets as well as trading education and trading ideas like this one, look for the next edition of Josh’s Daily Direction in your email inbox each and every trading day.
I’ll be bringing you more of my stock and futures contract trading tutorials as well as some additional trading ideas.
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Keep on trading,
P.S. My colleague here at Traders Agency, Anthony Speciale, continues to provide a great pipeline of trading opportunities from his crude oil analysis.
To learn more directly from him, click here for an on-demand seminar.
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