Growth stocks and the Nasdaq have outperformed for most of the market’s recovery over the last four months. This is consistent with the disciplined approach of sticking with winners and trying to avoid value traps.
However, there have been two periods that small caps showed relative strength: late April-early June and late May-early June. (See Smart RS on chart...
... for a 3.64/contract credit.
Notes: Going Plain Jane directionally neutral in the highest volatility broad market exchange-traded fund on the board. Looking to take profit at 50% max or manage on side approaching worthless/break even test.
As we continue to embark on this epic economic bubble , there will be varying components that will be mixed in so the trend can continue. To allow some normality to the markets, profit rotations still seem to be taking place and tech seems to be the one market that is becoming exhausted. With that said, I think we continue to see those absurd profits...
Wave 4 retraced to .382 fibo levels.
Also 5 wave in larger wave 3 done.
So wave 5 intact and in progress.
Need a break out of box first 153.
And then close open above 153.168 to 170 possible.
$IWM made a nice pennant consolidating between the 50dma and 200dma. Measured move brings us to a nice gap fill. Forgot to post this last week but looks like good additional confirmation with the last 2 days on consolidation closing over the 200dma.
7/31 Long Call/Put spread on IWM
Longer dated probably would be better, but I am confident that the markets will react to the current levels. The bear in me is hoping for another corona fueled sell off for the IV, but I am also hedged long in case things do not go my way.
Hope I don't kick myself later for only going 2 weeks out. May roll this position into...
The IWM ETF is the Russell2000 ETF, and I use it as a proxy of market internal breath. Case in point, we have a runaway Nasdaq (Technology sector) with a stalling S&P500. The small and mid caps need to be the internal support for this tech rally to continue else it breaks down from the internal infrastructure and implodes.
Exactly the heads up seen here...