The Case for Cautious Optimism Part 2

   

In Part 1 of this series, John Jagerson reviews why the Rydex S&P Equal Weight ETF (NYSEARCA:RSP) lends some support to a cautiously optimistic view on this market.

In this latest video, John takes a look at the iShares Russell 2000 Index ETF(NYSE:IWM), which counts Ocwen Financial (NYSE:OCN), Axiall Corp. (NASDAQ:AXLL), Pharmacyclics (NASDAQ:PCYC), Two Harbors Investment (NYSE:TWO), Genesee & Wyoming (NYSE:GWR), CommVault Systems (NASDAQ:CVLT), Starwood Property Trust (NASDAQ:STWD), Dril-Quip (NYSE:DRQ), Alaska Air Group (NYSE:ALK) and Brunswick (NSYE:BC) among its core holdings.

Video Transcript

If you’re not familiar with the IWM, it basically tracks the Russell 2000, which are the 2000 smallest stocks in the Russell 3000 stock index. It represents a lot of growth companies, a lot of tech companies, a lot of consumer discretionary. So, IWM is really a pretty good reflection of risk appetite because if traders are really nervous, then it tends to show up in IWM, and it can be quite dramatic actually.

By looking at the chart in the video, you can see there isn’t a wishy-washy trend like we have on the S&P 500, which is being weighed down by a couple of very large components. Instead, the chart looks pretty robust.

Now, I don’t really know how long that’s going to continue, obviously. I am a little bit worried myself that the closer we get to the sequester at March 1, that bullishness we have right now could be over quite quickly. However, as we plan for our SlingShot Trader positions over the next few days, I think we can still afford to be relatively bullish.

So, with the RPS, those are two reasons why we’re fairly optimistic on the market at large, at least in the short term.

Investor Place advisors John Jagerson and S. Wade Hansen are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news.  Get in on the next trade and get 1 free month today by clicking here.


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