While the market has climbed from the ground floor all the way back up the elevator shaft, it may find the access to upper floors there rather limited. After rallying 14% in just about 3 weeks, a ratcheting down of upside expectations would certainly seem warranted.
Amid a recent exuberant short-squeeze-driven bounce, the'real' valuation of the Russell 2000 remains at insanely high levels (and gravely decoupled from credit markets). But as Dana Lyons' explainsthe market likes to do whatever will fool the most people. So while this level should at least be an interesting one in producing a battle between the Russell 2000 bulls and the bears, it would also be an ideal spot for the market to unleash its shenanigans.
Based on the chart of the KBW Bank Index, Jamie Dimon’s decision to purchase shares of JPMorgan may have been well timed... but the credit markets have a very different perspective on what happens next.
The beaten-down Russell 2000 Small-Cap Index has reached a confluence of significant potential near-term support levels. Should this level fail to provide as much as a speed bump and the Russell 2000 slices right through it, then perhaps a more devastating market decline is already at hand.