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Scampering Up the Wall of Worry

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Rick’s Picks has tracked the Russell 2000 ever since it became apparent in mid-summer that the chimpanzees paid to throw your hard-earned money at a relative handful of stocks and invented themes had agreed to shovel the lion’s share of it into small-caps. It should be obvious by now, even to hard-core permabears, that the ballistic skew of the Russell index — and, in turn, all the others — is oblivious to such matters as concern us in our daily lives. America polity may be unraveling before our eyes, and a fresh wave of Covid-19 has already crushed hopes of an economic resurgence. But as long as the stock market is held buoyant by a practically limitless inflow of ginned-up capital from around the world, how could it possibly crash? Indeed, it cannot.  And yet, charts like the one above allow us to at least imagine a top, even if we have no clue what could cause it. The chart makes clear that nothing is likely to stop IWM, an ETF proxy for the Russell 2000, from reaching the 184.73 target. But this Hidden Pivot resistance is sufficiently clear and compelling to suggest that it won’t be a pushover when bulls get there and want more. That is not to say IWM can’t pop through. But if it does, we’d have to concede that the small-caps, perhaps joined by FAANGs and other growthies that have been relatively quiet lately, are embarking on a blithe path higher that will see the Dow trading well above 30,000 by 2021. _______ UPDATE (Nov 18, 9:04 p.m.):  A wave of selling hit late in the session, offering bears a rare breath of fresh air. Now let’s see if the scuzzballs who control the markets can  reverse the mood on ‘turnaround ‘Tuesday, since a mere two days aloft did not give them much time to distribute stock ahead of the coming relapse in the economy. At this point any rally should be regarded as an opportunity to get short.

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