Midcap ETF Stochastic Signaling a Buy

12/15/2009 12:01 am EST

Focus: ETFS

iShares Russell Midcap Growth Index Fund (IWP) - From the March bottom to September, mid-cap stocks outperformed the overall market.

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But profit taking and several disappointing earnings slowed progress, and since early November, the higher-quality stocks have led. 

On December 3, I wrote, "Now, however, it appears that mid caps may be coming into their own again.

A break through the triple-top at $44.50 could signal a dramatic burst to the upside.

Note the recent buildup in volume on IWP, along with a new stochastic buy signal.

If the break occurs, the target would be close to $50. But stop-loss orders should be placed at just under $40 to limit losses in the event of a reversal."

This opinion has been reinforced by recent market action.

By Sam Collins of OptionsZone.com

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