Russell 2000 Index: The Ridiculous and the Sublime

iwm russell 2000 index etf wild swings investing news chart analysis may 6

Given the open today, the Russell 2000 (IWM) kicked bear’s butts and took names.

Not only did Granddad hold the fast-moving average on the daily chart, it cleared last week’s high on the weekly chart.

Over the weekend, I featured two other economic modern Family members, the Regional Banks Sector (KRE) and the Retail Sector (XRT).

As of Friday’s close, KRE came within spitting distance of its 50-WMA.

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XRT has another dollar to run until it gets there (if it gets there).

Even with IWM’s impressive run in the face of additional tariffs on Chinese goods, XRT and KRE remained red.

Therefore, is the prediction that by the time XRT and/or KRE reach their 50-WMAs, the top will be in, still relevant? 

The major lessons for today are: 

  1. Don’t panic, have trailing stops far enough away to keep out of the fray but close enough to lock in profits.
  2. Use the first 30-minutes of the trading session to place stop loss order or execute new trades-today that worked like a charm.
  3. Ignore headlines and focus on phases, especially in the Modern Family.

Which brings me back to my question-what happens to XRT and KRE given IWM’s strength?

KRE has its 50-WMA at 56.80. Today’s closing price-56.55. Close, so definitely eyes here tomorrow.

XRT has its 50-WMA at 46.85. XRT closed at 45.50-not so close.

Hence, eyes here as well to see if it makes any headwinds or takes out last week’s low at 44.85.

IWM has to hold 158, today’s low, should either XRT or KRE show weakness.

Regardless, Semiconductors SMH and Transportation IYT, last week’s stronger sectors, took hits even if they recovered from the lows of the day.

That means that if money is really rotating into the weaker modern family members, we must see KRE, XRT and IWM hold up.

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S&P 500 (SPY) – All-time high 294.95. Must clear and must hold 290 

Russell 2000 (IWM) – New swing high made at 161.11. 158 first level to hold and then 157.15. 162.74 the October high next resistance. 

Dow Jones Industrials (DIA) – 269.28 all-time high. Must clear Friday’s high at least 265.25 and hold 260. 

Nasdaq (QQQ) – All-time high at 191.32. 186.43 big support for this to hold.

KRE (Regional Banks) – 55.90 the 200 DMA pivotal with 56.85 significant resistance.

SMH (Semiconductors) – All-time high at 120.71. Must hold 113.49

IYT (Transportation) – 198.50 resistance from the day it broke hard must clear. Support at 190.

IBB (Biotechnology) – Has resistance at 108, 109, 111. So we need to see a lot of refresh buying. Critical support at 105.75

XRT (Retail) – 45.15 the closest pivotal support area with a way to go to the 50-WMA at 46.85. 

Twitter:  @marketminute

The author may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.