Anyone Perplexed by the IWM/R2k?

It's outperforming when it shouldn't be (the last couple months). I think there are lots of hedgies that were short US centric small cap businesses and long commodities. It's EOQ and deleveraging is happenning. Remeber when some of us discussed the "unusual" COT report for the R2K futures (big and small)? Commericals were multiple times record net long. They have nearly covered their position. I think we are approaching a time when small cap performance is miserable for a couple months and that time is coming soon. Normally I simply take in the message of the markets but I think the COT data is a tell that allows the possiblity of dismissing small cap outperformance (IWM). The multiple of the R2K including negative earnings companies is ridiculous last I checked compared to the large cap counterparts. They also deserve on par or lower multiples due to the liquidity crisis, too. The markets never "make sense." Right now insanity rules the day, though.

hi cirrus,

I think we are approaching a time when small cap performance is miserable for a couple months and that time is coming soon.

If you look at the CDN venture exchange, you'll see it has been having a miserable time for 18+ months now. The CDN venture exchange is comprised of small cap and junior issues. I think small caps are dead money for some time to come and this should already be reflected in the US markets since a while.

cheers,

john

Silent..agree but it hasn't been the case for the IWM. I think it will be, though.