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Can You Imagine That! Part II


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The data and opinions in this report are for general information use only and are not

intended as an offer or solicitation with respect to the purchase or sale of any futures

contracts. Although all information and opinions are believed to be reliable, we cannot

guarantee its accuracy or completeness. The open trade and previous recommendations

were suggested, but that does not necessarily mean any individual followed the trades

exactly as recommended. This newsletter has been prepared without regard to the specific

investment objectives, financial situation and needs of any particular recipient. Past performance

is not necessarily indicative of future results. There is a significant risk of loss associated with

trading futures and options. It should be noted that the impact on market prices due to seasonal

or market cycles and current news events may be reflected in current prices.

Jerry Welch, Commodity Insite!
Call me at 406 -682 -5010
Ennis, Montana 59729

Follow me on twitter@commodityinsite

Two days ago on Inside Futures I posted a piece entitled, Can You Imagine That! Here are the final few paragraphs.

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However, as I type furiously away, the Dow, Nasdaq and S&P are posting modest and mean modest downside key reversals. But the Russell 2000 is down 11.80 at 1484.90. And should the Russell close here or lower it represents the worst that stock index has closed since September 27, or lower.


But here is the rub and food for thought. On September 27, when the Russell 2000 was right here, Dow Jones futures basis December was trading at 22,284 vs. what I am seeing right now of 23,459. In other words, the last time the Russell was here, the Dow was 1175 points down from here.


Can you imagine that! Can you?

The time is 9:51 a.m. Chicago

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This morning an opinion piece from MarketWatch.com is entitled, "Small-cap stocks get tripped up, suggesting the broader stock market rally is in danger." Here are a few thoughts from that article.

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The divergence between the Russell 2000 and the Dow is evidence that risk perceptions are changing.

Small-cap breakdown

While other markets are pressing higher, the Russell 2000 is breaking down, and thats because small-cap stocks carry a higher degree of risk. When the Russell 2000 is weak versus the Dow, its often an indicator that investors are favoring larger and more reliable companies, and that is usually a sign that risk perceptions have increased.

The divergence in the Russell 2000 is evidence that risk perceptions are changing, and it is not in line with the tax benefits either. Arguably, the changes to the tax code would benefit smaller companies over their mega-cap rivals, but the Russell 2000 is still weak. Its because of demand, not tax benefits.

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As I type furiously away, Dow futures are 108 lower at 23,384, and all other stocks indexes are also in the red. My thoughts for today regarding stocks, shares, equities and the Dow is no different than what it was 2 days ago when I posted my piece here on Inside Futures entitled, Can You Imagine That! Thus my posting today will be entitled, Can You Imagine That! Part II.


In mid-September in my twice a day newsletter as well as on Inside Futures I stated that a significant, "trend change" would begin to unfold for stocks, shares, equities and the Dow Jones on October 10. As we all know, that did not take place with the Dow, S&P and Nasdaq. But the Russell 2000 hit an all time high on October 9 and has been leaking ever since. Including today.

The time is 7:10 a.m. Chicago


The data and opinions in this report are for general information use only and are not

intended as an offer or solicitation with respect to the purchase or sale of any futures

contracts. Although all information and opinions are believed to be reliable, we cannot

guarantee its accuracy or completeness. The open trade and previous recommendations

were suggested, but that does not necessarily mean any individual followed the trades

exactly as recommended. This newsletter has been prepared without regard to the specific

investment objectives, financial situation and needs of any particular recipient. Past performance

is not necessarily indicative of future results. There is a significant risk of loss associated with

trading futures and options. It should be noted that the impact on market prices due to seasonal

or market cycles and current news events may be reflected in current prices.





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About the author


Jerry Welch has been in the futures industry since the late 1970's and is a true veteran of the markets. He has been quoted often in Wall Street Journal and is author of Commodity Insite, one of the longest commodity futures newspaper columns in history. His weekly column has been published each week since the mid 1980's and is one of the most recognized names in the world of commodities.

Mr. Welch is also known widely as a, "so so" flyfisherman.  

His column is published by the Illinois Agri News in La Salle, Illinois, Cattle Today, in Fayette, Alabama as well as Consensus, in Kansas City, Kansas.

He can be contacted at 406.682.5010 for a view of his, "twice a day" market column that includes price forecasts and trading suggestions.

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