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Friday, November 18, 2011
Small Caps - Big Tech ratio
Just when I wanted to add to bearish positions, I check out the IWM-QQQ ratio and see what looks like a bullish pattern. I also check IWM-SPY and dat looks good too. So I back away from the bear button.
IWM-SPY[Edit: IWM-QQQ] has a nice little bottom, bullish divergence by MACD & ROC and a nice MACD push above zero. As long as the ratio is in a bullish looking handle above support, I'll hold off. On the negative side, ROC appears to be on a very short term negative divergence. But overall, this one begs bears not to get too brave too quickly in my opinion.
Small caps usually lead hard into new downside events.