Small Caps Have Fallen. Can They Get Up?
The Russell 2000 small cap ETF attempted a breakout in early November. But momentum soon faded and IWM led the broader market to the downside. Now that it’s fallen, can it get back up again?
The first pattern on today’s chart is the 200-day simple moving average (SMA). Prices rallied from this line in October. This week, they stalled at the same area.
Next, you have a price line around $226.50. This was roughly the level where IWM broke the descending trendline in mid-October. It became more prominent starting on November 24 when the ETF gapped downward. It then remained resistance on Wednesday of this week.
Finally, IWM has consistently lagged the S&P 500 since its big rally a year ago. (See the weekly chart below.) That kind of poor relative strength could make small caps especially vulnerable should the broader market pull back in coming weeks.
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern on today’s chart is the 200-day simple moving average (SMA). Prices rallied from this line in October. This week, they stalled at the same area.
Next, you have a price line around $226.50. This was roughly the level where IWM broke the descending trendline in mid-October. It became more prominent starting on November 24 when the ETF gapped downward. It then remained resistance on Wednesday of this week.
Finally, IWM has consistently lagged the S&P 500 since its big rally a year ago. (See the weekly chart below.) That kind of poor relative strength could make small caps especially vulnerable should the broader market pull back in coming weeks.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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