know what some of you must be thinking: why am I wasting my time in the IWM? Aside from the fact that I really like the upside potential of its 4 month base-like pattern, I also think that if Fed stimulus is going to "kick in" during Q3 and Q4, and if the narrowing of some of the credit spreads recently is any indication that fears of market risk are subsiding, then the small cap sector will benefit, although it has been lagging a bit.

This is not the first time I am early in a position, (and will not be the last, I am sure)-- in fact, I was long a few ETFs during the GE debacle, only to get clobbered and stopped out right before the most recent big advance from the March 15th low. In any case, if I am correct sooner rather than later about the small caps, then the IWM will rocket and make up lots of time and territory in the ensuing upmove.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

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