A Skirmish or Something More

It seems fitting that today, April 19th, is the anniversary of "The shot heard round the world," which of course refers to the opening shot of the Battles of Lexington and Concord on April 19, 1775. As you know, that began the American Revolutionary War and led to the creation of the United States of America.

Thus, as we see a mixed underlying market play out, the skirmish in the small caps housed in the Russell 2000 Index (gauging the IWM ETF) could easily be a flashing red light that this market is running on fumes headed into what figures to be a stretch with some headwinds for equities in the coming month or two. Then again, the resilience of bulls has been legendary for a good while, which means top-calling with precision is something akin to the Loch Ness Monster. 

But if we are to hedge, as I am currently doing, then my focus is on hedging via the weaker parts of the market like tech and small caps ( to clarify, weak as of late), rather than shorting the Dow or S&P, both of which have enjoyed some impressive rotation this year.

Turning to the IWM ETF daily chart, below, many bulls were quite boastful of their predictions for the Russell to lead this year. However, since the smalls have gone limp for the last month or so, the question much be faced as to what happens to the broad market should the highlighted potential bearish top actually confirm (another Loch Ness Monster type of deal in this market cycle, with head and shoulders tops rendered laughable). Still, that type of it-just-can't-happen thinking may very well prove to be a tell this the around, especially below $220, then $208. 

There is also the line of thinking that the crypto sell-off is negatively impacting IWM, not like the TSLA selloff today with QQQ. Either way, smalls and tech are generally leading lower which is why I am focusing my hedging strategy there. 

Elsewhere, CLNE is jumping nicely on this news, as energy in general shows some decent relative strength this morning.