Quote Originally Posted by brrim View Post
Pascal and Billy; on 8/23 the IWM LEV was -26,622. Tonight it is -37,909 a drop of 42.4%. What is the significance of this in light of the Robot's long IWM position?
Thank you in advance.
Robert
Robert,
The LEV on a major ETF like IWM is always distorted by large players’ hedging strategies. This is even more pronounced with IWM due to the lack of liquidity in individual small cap stocks.
Bullish large players in individual small cap names will SELL IWM for hedging their market risk. Bearish large players in individual names will BUY IWM for hedging their inverse market risk.
The weak LEV pattern suggests that large players are now hedging their market risk because they are increasingly more BULLISH on average on the small cap stocks in their portfolio. It is just a suggestion, because impossible to know for sure. The 20 DMF is by far a much more reliable indicator of large players net activity than LEV on IWM, which is misleading most of the time and not a leading predictive indicator.
Billy