Good Things Come in Small Packages

What a difference a week makes. In last month’s video I was talking about US small cap stock being rejected and rolling over at prior highs which was not a good sign for US stock bulls. I lamented “In bull markets you want to see small cap stocks leading” not lagging. Then Trump happened. Every talking head, prognosticator and market pundit was wrong. This is a great example (and one to memorize) of the markets will almost always do the thing that people expect least.

Notice in my weekly charts of the US small cap index, IWM, below, spiked up on huge volume and blasted right past the past troublesome (blue horizontal) resistance area. Notice also how price formed and inverse head and shoulders bullish reversal pattern which has a projected upside target in the 155-160 zone above, some 30+% higher.

bay area independent investment advisor cfp planner san ramon - IWM - 11-15-16

Not only is this bullish for small caps but also for all US stocks in general. As always there will be some laggards but this sign combined how the market is trashing bonds, is telling us we may be on the verge of seeing that shift from public to private asset investing finally begin its take off.