If you think today (Thursday) was ugly, wait and see tomorrow. Tomorrow market might drop over 2%. Everyone is talking about "lots of money on the sideline". There is not such a money. People will start to take money out mutual funds and stocks and leave it in cash as the market accerates sell off. That will increase the pressure in the market.
Russel 2000 might start to crack because of fiscal cliff
- Thread starter hajimow
- Start date
Quote from lwlee:
I thought you were bigger than that. Gloating isn't a honorable behaviour.
I felt that my post might be interpreted differently. My point was that you should not follow those so called analysts on CNBC and ..... They know nothing. Those are the ones who have all the toos (hardware, info, news) and most of them lagging the market performance. If a retail investor with a limited capital follows the news, he will definitely lose.
By the way, I am not buying on the latest news that the house will meet at 6:30PM on Sunday. Nothing substantial will come out.
I post most of my trades online. On ADI, IWM, MCD, YHOO. You can check and see whether I should be hurt or not.
I believe we will close 2013 flat or lower. The few percentage gain that we have achieved in the first few days will disappear soon. I have my reasons but too lazy to itemize them here.
Hajimow: As I wrote in another of your threads(or in response to one of your posts),compared to QQQ and SPY, the behavior of IWM seems to me to be: In a falling market IWM loses less than the SPY which loses less than QQQ. In a rising market IWM does better than SPY which does better than QQQ. Do you think this observation is not correct? I would be interested to know it if and when IWM changes in relation to others.
You are absolutely right. IWM is outperforming SPY and this trend has been on for a while but historically small caps are more volatile than blue chips. When things go bad and market goes under a correction, small cap underperforms because investors dump riskier (small caps) stocks and fly to saftey (blue chips). At this moment large caps are fully valued (based on the financial uncertainty in US and EU) and also lower predicted GDP for 2013 that investors have put a blind eye on it for the moement.
At this moment when blue chips are fully overvalued, fund managers take some unknown stocks (try to find gems) which are almost all small caps and try to promote them. Then can do it because of lower volume. That is why you see higher volatility. They cannot do it with INTC or MSFT. When things start to go bad (just a correction) or even in a strong bull market, blue chips become more attractive and small caps are dumped. With all the above story, I believe IWM is posed to a good correction. Patient is needed. I also recommend to sell weekly or short term covered PUT for those who short IWM to get more money. If you have followed my posts, sometimes it seems that I am worng but I keep punching. You cannot expect a great profit in a day. Trade small and leave some room to increase your position if things go wrong !! (I know many people don't like this idea) and be patient.