Small cap stocks have been struggling since reaching its 200 day moving average back on February 20th. This key index began to pullback on the 25th and, after a shallow rally last week, the IJS is heading for its lowest March close today. We highlighted this divergent action back on March 1st. On March 6th we opened a long in the TWM(ProShares Ultra Short Russell 2000 Index) to take advantage of the weak action in the Small Cap sector. We expect more downside for the IJS.
Details: The IJS is heading for its first close below the 50 day moving average since January 15th. Initial support near the January high held up well after the first phase of the pullback. This key area appears to be giving way today. A close below $146.80 would violate the February lows. Once this area is clearly taken out there is very little support nearby.
At time of publication we are long $TWM