Mirror, Mirror on the Wall, Are Small Caps Now the Fairest of Them All?
This rotation into small caps and retail has been something many analysts have waited for.
And let’s face it:
- The Russell 2000 ETF (NYSEARCA: IWM) just made a new 2025 high.
- The momentum is strong and above the Bollinger Band. (see daily chart above)
- The Leadership clearly shows its outperformance over the S&P 500 (NYSEARCA: SPY).
So, should investors be piling up on small caps?
Maybe, but always look left.
Above is the weekly chart of Russell 2000 ETF (IWM).
- The peak high was made in November 2021 at 244.46.
- Then, in November 2024, IWM made an all-time high at 244.98, just slightly higher than the 2021 peak.
- Now, in 2025, IWM remains 4% away from the all-time high.
That makes the 2021 and 2024 tops still double tops unless that area clears.
For now, with mom good, it is possible that IWM remains supreme.
However, as I say, the market is only as strong as its weakest link,
We must watch semiconductors (after Nvidia earnings) and Transportation IYT, still struggling.
If chips or transports go from weak link to an anchor, we could see IWM fall.
Back to the Daily chart, that is when we look at the July 6-month calendar range high as support or around 226.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
