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Here Is Why The Russell 2000 Has Not Only Shaken Off The Market Rout, But Is Rising
One of the ongoing attempts to justify a bottom to the market selling rout and preempt a bounce in stocks, at least one that is more than just the Fed's direct and indirect intervention in the capital markets, has been the pundits' repeated highlighting that the Russell has been rising all throughout the past few days' collapse, indeed during the longest, 6-day Dow Jones losing streak in over a year. The conventional thinking here goes that the small caps always presage a large cap inflection point, and this is precisely what the Russell ramp in the past few days has been heralding. In theory, this is absolutely correct, In practice, it is 100% wrong.
For those curious why the Russell 2000 has completely ignored this week's broader market rout and is in fact higher now than last Friday, the answer comes from a recent technical note from Bank of America which says that as of the first week of the month, the "Russell net short positioning largest since 2008 after fifth consecutive week of selling."
More:
Large specs sold Russell for a fourth week to increase net short position to a new five year high.
And:
Large speculators increased Russell 2000 net shorts to -$8.0bn from -$7.9bn notional.
Bottoming. Russell 2000 survives a probe below BIG support at 1082 last week. Regaining the August low of 1107 would help confirm a low in the Russell 2000 and the potential for a seasonal rally. Support is 1082-1075 (Feb/May lows, down channel / measured move from July high). Resistances: 1107 (August low), 1144-1151 (50- and 200-day MAs), and 1184 to 1214 (range highs)
Still confused why the Russell 2000, which until a week ago was the most shorted in 5 years, is rallying? Then call the margin clerks who have unleashed upon their over-leveraged hedge fund clients the most aggressive forced buy-in of RUT stocks in years.
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What no mention of Ebola, what a lame article...
DaddyO
Good point DaddyO, ebola-related small cap stocks are helping keep the market rolling. LAKE is up 300% in a month!
It's the diseased economy stupid......and lack of full time jobs.
What's not to be bullish about?
e=every
b=body
o=out
l=looking
a=already
margin clerks force hedge funds to buy Russell 2000 stocks? So hedge funds sell large cap stocks to pay for small cap stocks?
where were the algo driven HFT's while all this was going on?
making out like bandits or bribing the margin clerks?
i don't get it. you say shorts at all time high? don't stocks rise when shorts cover?
or are you saying the margin clerks called their hedge funds and told them they needed to cover their short positions, and that forced covering has pushed up the russel 2k, but it is not going up because small caps are doing better in the economy?
how does a margin clerk have the authority to do that?
and are they pushing up the russel higher on purpose by using forced covering, so it can go even higher, and then they can short it from an even higher cliff, nad make much moar millions?
is there a zero hedge for pre-schoolers like me?
explain it to me like i'm 5 years old and i want both marshmallows now.
I had to read the article a few times over.. I interpretted it as large traders have loaded up short on the russell, and some of them had to cover due to margin calling. What made the last week moves so large was a combination of severe oversold condition, large traders covering, and politcally motivated jawboning by the feds goons to trick the retail sheep into the all clear. Its up this morning as I am writing this, but once reality hooks up with the russell again its going to get very ugly and violent fast.
tldr: Too many shorts + big traders cover + jawboning by media whores for sheep = b.s. short fucking moves. Stay tuned for more plunges..
Ditto.
My thanks to you both for the education on "this round" of fraud and how absolutely lawless and out of control this has all become!
How ironic the hubris is with the announcement(s) of the HFT scandals that have been bubbling to the surface for months that serve as the backdrop and embarrassment to any investor at this point with skin still in the game!
+1
Insiders Blame Rove for Covering Up Iraq’s Real WMD - The Daily Beast
Starting in 2004, some members of the George W. Bush administration and Republican lawmakers began to find evidence of discarded chemical weapons in Iraq. But when the information was brought up with the White House, senior adviser Karl Rove told them to “let these sleeping dogs lie.”
The issue of Iraq’s WMD remnants was suddenly thrust back into the fore this week, with a blockbuster New York Times report accusing the Bush administration of covering up American troops’ chemically induced wounds.
To people familiar with the issue, both inside that administration and outside, the blame for the coverup falls on one particular set of shoulders: Rove’s.
So there were WMDs?
I'm off the fence.......Rove is a idiot.
Did not want to trace source, as the label might say "made in USA".
Discarded remnants? Seriously? Of course, everyone knew Hussein had chemical weapons - he had used them on the Kurds. What was stupid was using that as justification for an ill advised invasion. After a decade of sanctions, remnants were almost certainly all we were going to find. Wish we had the trillion $ back...
RUT definitely the key market signpost today: will the machine-driven short-snapping move to sit, pre-market, exactly at the 20 DMA provide a re-loading point for new, more powerful institutional shorts (perhaps after a bit of early hazing), or are so many still short that we get a screaming momentum acceleration, as one might see in passing close to one of Jupiter's larger moons (?)
R2K had a correction ahead of the broader market, that's all. They are not in sync.
The 'data set' that predicted the Ebola cruise ship problem?
http://wtfrly.com/2014/10/17/data-set-that-predicted-the-ebola-cruise-sh...
Cruise ship denied port in Belize as US tries to evacuate Dallas nurse who handled Ebola sample
http://wtfrly.com/2014/10/17/cruise-ship-denied-port-belize-us-tries-to-...
just when you thought you were cynical enuf or u'd hv strychnine for blood, someone comes up w/ crap like this. even when you're right you're wrong.
i'll take two hemlocks and a nail gun chaser