Today's chart is of IWM which is the Russell 2000 index ETF. I have recently posted a trade going long on QLD which is based off the fact that there are many oversold conditions recently. However, after this recent advance, there is a chance that things have gone too far too fast at least in the short term. So, what I am posting this chart for is to consider either an option trade or short IWM trade to mitigate any loss on QLD if there is a short term pullback.

Technically IWM has bumped up against the upper Bollinger band coincident with overbought fast stochastics and a peak in momentum/rate of change that is higher than any in the past year. Also it is likely that a swing high is forming today on IWM, so a stop loss could be set a penny above yesterday's high on this trade if going short.

As far as exiting the trade, you may get stopped out or you decide to adjust your stop loss lower as the stock moves down. Also, you may decide to exit when price gains are 3X your risk going into the trade. If trading an option, I would exit on any close above yesterday's high, or exit if the trade is not profitable in 5 trading days. Otherwise I would likely let the trade run until fast stochastics are oversold.

The exit is always the hard part, so please ask questions in the comment section if any clarification is needed.

Pete