I know what some of you must be thinking: why am I wasting my time in the IWM? Aside from the fact that I really like the upside potential of its 4-month base-like pattern, I also think that if the Fed stimulus is going to kick in during Q3 and Q4, and if the narrowing of some of the credit spreads recently is any indication that fears of market risk are subsiding, then the small cap sector will benefit, although it has been lagging a bit. This is not the first time I am early in a position, in fact, I was long a few ETFs during the GE debacle, only to get clobbered and stopped out right before the most recent big advance from the March 15 low. In any case, if I am correct sooner rather than later about the small caps, then the IWM will rocket and make up lots of time and territory in the ensuing upmove.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.