It May Be Time to Play Small Ball
This column was originally published on RealMoney on March 27 at 12:00 p.m. EST. It's being republished as a bonus for TheStreet.com readers.
Let's focus on the incremental positives in a market that's been perfect for daytraders but a real pain for everyone else. I know how tough it is to keep your sanity when every rally gets faded and every selloff attracts support. Hopefully this March madness will come to an end soon.
We've been stuck in a long stretch of high noise and low signal. The greatest risk during these choppy periods is to overtrade, because every uptick looks like a bull market and every downtick starts a panic. In reality, not much has happened in the financial markets this month, but things could change quickly in April.
Note the terrible reward/risk profile in the small-caps so far this year. Since the start of February, the iShares Russell 2000 Index Fund (IWM) has risen less than 2 points, although it shows two major selloffs in the same period.
In turn, this rally might send OBV to a new high for the year and generate yet another bullish divergence. These dynamics would follow the melt-up scenario for a spring rally I discussed
|Source: eSignal Power Scan|
It's always been my opinion that it pays to have more -- not fewer -- expert market views and analyses when you're making investing or trading decisions. That's why I recommend you take advantage of our free trial offer to TheStreet.com's RealMoney premium Web site, where you'll get in-depth commentary and money-making strategies from over 50 Wall Street pros, including Jim Cramer. Take my advice -- try it now.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV