Russell 2000 Trading Like Small Cap Stocks are Both Immortal and Finite

“Grandchildren are at once, emblematic of your immortality and a constant reminder of your own finiteness.”

A perfect description of today’s action in the stock market. And what if the Russell 2000 (IWM) could talk… what might he might say?

The Russell 2000 Index (RUT) is also known as the Granddad in our Economic Modern Family of stock market ETFs.

The day began with a gap higher, taking all indices except for the Russell 2000 ETF (IWM) to a new swing high.

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The Transportation Sector ETF (IYT) also began the day with a new swing high.

IWM began with a sense of immortality also gapping up on the open. 

However, IYTs selloff became the reminder of IWM’s finiteness, therefore Gramps also slipped further away from its highs of the day.

Even before IYT started to slip, IWM could not get enough power to run up to its 200 daily moving average at 156.66.

So, what is it Grampa: Immortality or Finiteness?

IYT made a new swing high today 193.59. It then closed near its intraday low.

That means that tomorrow is again key. A close under today’s low at 190.99 will be considered yet another topping reversal. 

If IYT holds today’s lows, over 192.15, IYT regains the floor trader’s midpoint, important for intraday strength.

The Russell’s really need to clear the 200-DMA at 156.66. 

Then by Friday, it needs to clear the 50-WMA at 157.10. Hurdles remain.

Furthermore, should IYT fail today’s lows, IWM has to hold 154.50, or we are looking at a test of the underlying 10 and 50-DMAs at 152.75.

A friend asked me today what I thought of the market.

I said that a bubble will come at some point, but for now, enjoy the party.

Granddad Russell 2000 has the power to keep the party going into the night or sound the fire alarm and clear the room.

S&P 500 (SPY)  – New swing high today at 287.76. Now we watch 285.75 today’s low to hold or not.

Russell 2000 (IWM) – 154.40 pivotal support and 156.70 area the place to clear.

Dow Jones Industrials (DIA)  – New swing high today at 262.72. Now we watch 261 to hold or not.

Nasdaq (QQQ)  – New high today at 184.92-now we watch today’s low 183.21 to hold or not.

KRE (Regional Banks) – 53.40 resistance on a closing basis still relevant. Like to see 52.70 hold.

SMH (Semiconductors) – 110.60 now pivotal support with 114.55 the all-time high.

IYT (Transportation) – 191.40 the immediate pivotal area. Under 190.99 could see a quick drop to 189.10

IBB (Biotechnology)  – All things considered, this is lagging behind. 115 key resistance and must hold 111.20 area.

XRT (Retail) – 45.50 resistance and 44.50 key support.

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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.