Russel 2000 might start to crack because of fiscal cliff

Check out this one year chart that compares IWM and SPY. You can see that while IWM was outperforming SPY at some point lost its steam and underperformed SPY.
 

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Time: 9:42 ET on Tuesday.

Check out IWM vs SPY. IWM is flat to down and SPY is up 0.45%. I believe market has topped and IWM shows the early signs of correction. IWM is trading at 87.31 now and it can go down to 78 if you be patient.
 
Quote from deonrock:

The chart size is too big.....it is not in size of posting!!!
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what do you mean? did ou have any problem viewing any of those attached charts? which one?
 
IWM at 88.12 now (time 11:17 ET 1/17/13). I am very surprised by it resilience. I am not buying this overheated rally. Things will get ugly but it needs patience.
 
Quote from hajimow:

IWM at 88.12 now (time 11:17 ET 1/17/13). I am very surprised by it resilience. I am not buying this overheated rally. Things will get ugly but it needs patience.
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Bullshit, the russell just cracked through upper resistance which it has been testing for the past week. Your theory was sound but now it is not. The market has spoken -- it broke out above resistance. Resistance is now support. Get bullish as long as we stay above support on the daily. If support fails, then re-evaluate.
 
INTC price action after the earning is interesting:

As always INTC cannot rally after the earning no matter how the earning is. At one point INTC was up 5% AH and now it is up 1% and it seems that it can end up in red in minutes. It shows market wants to sell into good news.
 
Quote from hajimow:

[B ]. It shows market wants to sell into good news. [/B]
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You're positive about that ? Intraday the market has been *very* strong since beginning of january. I'm glad I made some money leveraged on the long side, including a significant amount of small caps, beginning of the year because the bearish bias I had in the following couple of weeks essentially amounted to losses. Now the debt ceiling stress has been put off a couple of month, and i'll be very wary on the short side as long as we are in seasonally strong months.

Besides shorting IWM into new year is pretty risky. I read recently how Mc Millan in the nineties noted that overperformance of short caps over big caps at the beginning of the year was already widely publicised, yet still consistently materialised, and almost 20 years later it still looks as much of a reality.

FWIW I'm still short some big caps and EEM, and should remain so for a few days, but I might slip back on the bull cap before end of January.
 
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