Stock Markets Analysis and Opinion

Russell 2000: Small Caps Eye Momentum as Risk Stays Low

2025.01.22 04:29

On December 18th, 2024, the Small Caps as seen through the lens of our Granddad (), crashed. 

Why? 

Mainly due to the ’s hawkish rate cut and talk of maybe only 2 rate cuts in 2025. 

IWM is extremely interest rate-sensitive. 

However, from a technical viewpoint, IWM tested major support on both the weekly and daily chart timeframes.  

Weekly, the price tested and held the 50-week moving average. 

On the Daily chart, IWM tested and held the 200-DMA. IWM Daily Chart

That low was established on January 13th and has become the low for the January 6-month calendar range reset. 

Now, IWM clears the January 6-month calendar range high, which we have been talking about incessantly as the great buy opportunity once an instrument clears it. 

So, what is next? 

I ended with the weekend Daily discussing that the calendar range also offers a minimal amount or risk if trading or investing. 

Using the low of Tuesday the 21st, $226.99 or just below the extremely pivotal $227 now should hold. 

Plus, IWM still needs to clear the 50-DMA just overhead at $230.60. 

Nonetheless, we see the calendar range breakout more significant right now. 

Leadership or our Triple Play indicator supports the breakout. 

Momentum has yet to take off, so we prefer a tighter risk out of the gate. 

Incidentally, this is how one should analyze any instrument at this time of the year.  

Remember, the odds of a follow-through is high, and the risk is nominal. 

ETF Summary 

(Pivotal means short-term bullish above that level and bearish below) 

  • S&P 500 (SPY) 599.70 now must hold 
  • Russell 2000 (IWM) 227 now must hold 
  • Dow (DIA) 433.38 now must hold 
  • Nasdaq (QQQ) Still has not cleared the January calendar range high 
  • Regional banks (KRE) A move over 64.25 compelling  
  • Semiconductors (SMH) 260 now support as this finally edges past the calendar range high 
  • Transportation (IYT) 71.16 important to hold 
  • Biotechnology (IBB) 137 key to clear for a further rally    
  • Retail (XRT) Better but not convincing yet-81 must clear 78 must hold 
  • iShares iBoxx Hi Yd Cor Bond ETF (HYG) Junk bonds super happy



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