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It seems it needs some nerve to say something bears-friendly. Anyway, I only have a very tiny portion of shorts and the majority of my positions is riding along with the bull's rally. However, here is one thing I observed and like to share with you.
Recently IWM outperforms SPY significantly again and feels like everyone in the market is afraid of missing the northward train and chasing the small priced stocks. The ratio of IWM to SPY has reached a record of 0.62. I found that there are totally 4 instances that this ratio is above 0.6. The first three of them are no pleasant at all, which were all followed by serious sell-off. Maybe we could call it a great top? I have no idea whether or not the market will follow the same footprints, but do feel the market participants are too optimistic. I remain cautious to be on the bull side and will ran as fast as possible when this warning sign turns to be real. Indeed, the formation of this kind of top took quite a while with reversal of reversal things. So be alert, bulls and bears! |
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