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12/15/23 Booking Profits on the Russell 2000

News:

On Thursday, markets built on rate-cut optimism, posting another day of solid gains.

The indexes all rose.

One tiny fraction of the market continues to outperform the rest.

Chart by TFK

Small Caps in the Russell 2000 are leading the charge higher…

  • Dow Jones +0.4%
  • Nasdaq +0.2%
  • S&P 500 +0.3%
  • Russell 2000 +2.7%

The “January Effect,” a time when small-cap stocks tend to outperform the rest of the market, is starting earlier and earlier each year.

Sector Round Up

7 of the 11 sectors posted gains on Thursday.

At the top…

  • Energy (XLE) +2.9%
  • Real Estate (XLRE) +3.6%
  • Materials (XLB) +1.7%

At the bottom…

  • Healthcare (XLV) -0.5%
  • Utilities (XLU) -1.3%
  • Consumer Staples (XLP) -1.5%

Technicals: 

The Russell 2000 has pulled off an amazing turnaround…

RUT Daily Candles – Chart from thinkorswim

The index made new 52-week lows in late October—And we told you we were buying the dip.

On Thursday, the index made new 52-week highs. The turnaround marked a gain of about 23%.

  • We booked the first partial profits of the season yesterday
  • Our profit on this trade is above 50% … it took just 6 weeks
  • The vehicle we used was TNA, a leveraged 3x bull ETF

We remain long in similar ETFs tracking the Nasdaq and the S&P 500.

Your latest readout…

Timing:

Today is the final triple witching of the year.

Watch for possible volatility near the close.

On Monday, we’ll reveal our picks for the “Free Lunch” trade.

Watchlist:

*Low Float
^Open Position

*CHSN on watch
*ALRN on watch
*IMMX support at $5
*OPFI support at $4.25
ALXO support at $12
AAOI support at $20
STTK on watch
ILPT support at $4.50
ABSI support at $2.50
ASPN support at $13
PRCH support at $2.20
JBGS support at $17

Secondary watchlist—float about 100 million

GPS support at $20
HPP support at $8
NMRK on watch
GOTU support at $4.50
^IOT support at $35
S support at $24
LYFT on watch

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