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Robert A. Graf
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Robert Graf is an independent investor and educator with a 20+ year academic background in neuroscience, pharmaceutical sciences and pharmacology. He focuses his attention on index options, top performing companies, commodities, and is a student of price action. He is founder, President, and... More
  • Bullish on Russell 2000 if more lending transpires 0 comments
    Dec 20, 2009 10:57 AM | about stocks: SPY, ES-OLD

    As you'll recall, last Monday, December 14th, President Obama spoke to several banking lender CEOs about making more loans to small businesses.  During this session on Wall Street, the S&P500 futures, the DOW 30, and the Russell 2000 closed higher on the day.  After the meeting was over, the President spoke, and the bankers were interviewed, something interesting happened during this week.  The gains that the Russell 2000 climbed to were sustained while the other indices last ground on the week, especially the DOW.   In fact, the Russell 2000 appeared to have taken its gains from the DOW30 during this time.  When we think of the DOW30, we think of large cap blue chip companies, by contrast, when we think of the Russell 2000, we think of an index made-up of smaler dynamic businesses, that really could benefit right now from more financing, obviously.  Thus, this news was a bet that would happen.  In fact, the Russell 2000 has been up against major resistance in the 595 - 605 area for a while now.  It manages to break out only to come back down again and have to retest the resistance all over again.  This time looks different, the major resistance was edged through largely this week when the bankers and the President met and the days that followed.  Subsequent sessions saw these indexes drop significantly due to the Empire State Manufacturing Index coming in roughly 20 or so points below expectations, while the weekly unemployment initial claims rose, yet the Russell 2000 only fell to the top of the resistance levels of before, and importantly, bouncing back to end the week better than the DOW30 and the S&P500 indexes.  A keystone event seems to have occurred.  It seems likely that with other confimring events demonstrating that small businesses are in fact getting more funding, the Russell 2000 might take a leading index position and be harder to bet against for the medium term. 

    Disclosure: RUT

    Stocks: SPY, ES-OLD
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