Small Caps (NYSE:IWM) Headed For Bumpy Ride

The iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) has been by far the weakest performing index in 2014. It recently topped out on July 1, 2014, more than 3 weeks before the S&P 500 (NYSE:SPY) and Dow Jones Industrial Average (NYSE:DIA). As of today, the index has triggered a large head and shoulder top pattern on the daily chart, by closing below the neckline at $112.60. This tells me that eventually the iShares Russell 2000 (NYSEARCA:IWM) will trade down to the $103.50 level. I will be looking for a bearish pattern setup below the neckline to go short for a good risk/reward trade. Take note of this important chart pattern formation below, and be ready to trade it!