Tuesday, October 06, 2009

Reasonably bearish on IWM here

After a solid bounce off of its rising 50 day moving average last week, the small caps are looking like a decent short again here. Volume supports the notion that there is significant distribution as the broad market begins its long overdue correction following seven months up in a row. No, I am not expecting a crash, and no I don't think that this is the end of a bear market rally. Recall, that my "line in the sand" for IWM is at about $55. So long as IWM stays above that level I'll call this a cyclical bull market. Could there be a crash, is there risk in owning stocks? Of course, and I think few actually believe this is anything more than a collapsing US dollar fueled stock market bubble. But it is what it is, and right now the longer term trend is up despite expected weakness over the next month or so.

Disclosure: I do not have any position in IWM

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