Print the page
Increase font size

Posted February 23, 2021

Scott Stewart

By Scott Stewart

[TODAY] Profit on Cracks in the Bull Market

Welcome back to the Rude Awakening for Tuesday, February 23, 2021.

We have an interesting trading idea for you today!

In it, youll find out the simplest way to profit on the cracks were seeing in this bull market this week

If youve been keeping up with the education series on asymmetric trading, youll remember one of the components we use in this new system is a hedge, or a short.

We know markets can go one of three ways: up, down, or sideways.

Now, its been giong up for a really long time but you can start to see the cracks with some sell signals coming into play. We want to take advantage of these downturns.

An important thing to remember

What goes UP the fastest usually comes DOWN the fastest

The perfect example of this is the small cap stocks. This is the Russell 2000, and the ETF that tracks these is ticker symbol IWM.

Small caps tend to outperform in the good times and crash even harder in the bad times.

IWM is our preferred security to short.

The challenge that brings, as happens with a lot of stocks, is when you look to short them you sometimes see the flag Hard to Borrow...

What does this mean? And how do we get around it?

Your Loophole for This Hard to Borrow Stock

This nomenclature means what you think: shares of the stock are difficult to borrow, which is the essence of shorting a stock. You borrow it from your broker, sell it to someone else, and pocket the difference.

So, it would be hard to short the IWM


As smart traders, we have an alternative option.

That is the inverse IWM trading security: RWM.

RWM is an ETF that tracks the inverse of the IWM.

If you look at the chart in todays video, you will see its a mirror of how the Russell 2000 has been doing.

Because IWM has been shooting up throughout the past year, RWM is trending much lower. That means its much cheaper.

And because of the cracks in the bull market were seeing today, and the sell signals on the IWM, we can make some profits through buying LONG its inverse, rather than going SHORT on IWM.

RWM is now getting a cluster of buy signals.

This could be an opportunity to start bottom-fishing in a position that would make us money if the markets went down.

How would this appreciate? If the IWM continues dropping as it has been the past few days.

And, if you havent already, get caught up on your asymmetric trading series!!! I promise you wont regret it.

See you tomorrow.


Scott Stewart

Scott Stewart

Editor, Rude Awakening

Is This Rally Real?

Posted August 16, 2022

By Sean Ring

Happy Tuesday! Thank heavens it’s cooled off here in the north of Italy. I was sweating profusely in NYC and was hoping I’d get a respite back here. And while I’m enjoying the...

A Summer’s Odyssey

Posted August 15, 2022

By Sean Ring

Happy Monday from a much cooler Asti! It’s been ages since I wrote you from here, and I’m excited to be back. But my NYC trip, while infested with rats and stinking...

Enjoying the Inflation? Have Some More…

Posted August 12, 2022

By Sean Ring

Yesterday morning, the PPI number came out. This Rude was first written on December 14, 2021.  But it mirrors perfectly what’s going on today. I know newsletter writers are prone to hyperbole...

Zero Percent, Joe? Come On, Man!

Posted August 11, 2022

By Sean Ring

I’m nearly done with this graduate program and head home on the Friday night red-eye to Milan. So tomorrow’s Rude will be a re-run. From then, I’ll be writing fresh new columns...

Even Donald Trump Needs a Second Passport!

Posted August 09, 2022

By Sean Ring

Last night, I shared a wonderful dinner with my cousin, Corey, and his wife, Kim, in downtown Hoboken, NJ. Hoboken, a square mile where Frank Sinatra was born, is just across...

A Weekend in Baltimore

Posted August 08, 2022

By Sean Ring

Good morning on this fine Monday in New York City. You know what? I’m not at all cranky today. In many ways, Baltimore is cleaner and more crime-free than the Big Apple. I...