I must be missing something -- other than oil on the decline, I can't see why the small caps are rallying. We're looking at close to 2% today and a 50 point increase in the last 4 trading days? Bunch of small financials in there? Just tagging along on the broadbased market move upward? The broadbased move upward today ... on bad news from earnings? The 14 day RSI on RUT is over 68 with today's close approaching and RUT at 715 range, which indicates we're likely for a pullback. But that doesn't make my short position at 730 on my IC feel any safer. Discuss.
Your short position at 730 is a great entry, but why are you giving so much of it back? What's your timeframe?
I have an August iron condor open with 730-740 as the call side. I convinced myself this morning with the futures down below 695 prior to the open and bad news on the earnings front for the big players coming out that at worst the market would trade sideways. Needless to say, I got quite a jolt when I saw the RUT was at 714 and climbing and I'd done nothing in the intervening 7 hours. Especially after how much it's climbed the last three days. Just. Feeling. A little queasy. I'd put a smiley face icon here - but I'm not smiling.
1) In a bear market, you generally expect smaller-cap stocks to fall farther than large-caps. 2) The short-covering rallies of small caps can also be larger too.
Small caps historically 1) bottom earlier 2) outperform large caps coming out of significant bottoms. Now I'm nowhere near insinuating this is a major bottom, but the russell100/russell2000 ratio (large/small) might be worth keeping an eye on in the coming months. Just something to keep in mind going into the future.
one of the main reason is the low daily volume in most of the 2000 stocks. Today up until close the 20 or so I look at for sentiment barely breached 400 thousand shares. The market markers July/ August play ground. they will short squeeze the shorts, while allowing the big boys to exit on the backs of the small and retrace. I would agree I am very surprised with the rally we have had over the last several days with little or no retracement. I would of thought it would of tested mid 70's especially after the last few days reports. who says the index can't be manipulated let alone who the MM really are. w
Looks that way from reading the RVX chart in TOS. I'm either going to be breathing easier if it rolls back to around 700 or I'm going to have taught myself an expensive lesson about not watching the market all day.