Chart Focus: Why The Small Caps Are Important To Watch

stocks up and down arrowsAs I type this quick research note, the US equities markets are set to open lower. In fact, the last I looked, The iShares Russell 2000 (IWM) was trading around 114.85 in pre-market (down almost a percent). And this has the small caps index near two levels of technical significance that could alter the path for equities in December.

First, there is a band of support that forms across the November 19 (114.37), December 1st (114.81), and December 9th (114.74) lows.  The small caps had shown some strong relative strength on Tuesday but have given most of that back. It would be constructive to see these lows hold. On the bearish side, should this 3 point lateral support break for more than a couple days, then it has the makings of a rounded top.

Second, the 200 day moving average is flattened out and the 50 day moving average is rising. These levels bears significant psychological importance for the small caps. Holding the 113.50-114.00 support zone is on the bulls wish list to santa, as a complete breakdown here could limit a holiday rally. Trade safe.

iShares Russell 2000 Daily Chart – Small Caps Watch

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small caps analysis december iwm daily chart


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No position in any of 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.