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Small Caps (Update)

Posted by StockBuz on December 7, 2014 at 8:08pm in Technicals

In October I pointed out that the Russell 2000 (IWM or $RUT) could be forming a bullish butterfly pattern, having found buyers off of the 20month SMA.  (See here) 

Well so far so good and I'm calling it's recent consolidation a bull "flag" due to no significant breakdown in the other three indexes, nor semiconductors.

Friday we saw banks and broker/dealers make a nice reversal higher after comments were made, that while the ECB is not easing "now", they will be preparing a QE plan for their January meeting.  The U.S. 10 year popped and the banks/brokers followed in suit.

While much of the equity market is extended, banks still have room to run and I feel small caps will rip to the upside.  My next target $1300

Conversely VIX below $11 is almost too tempting to pass up.  It's extremely cheap protection............just food for thought.

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Tags: russell 2000, small cap stocks, rut, iwm, vix, butterfly pattern, bull flag
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