Are Small Caps About To Outperform The Market?
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– ETF Watchlist –
The story of the day yesterday was financials and small caps that outperformed the rest of the market the remained largely flat on the day. This kind of performance, from small caps especially, along with the underperformance of the defensive sectors, hints that the rally might get some of the broader participation we had been looking for.
The area of the market I am most interested to watch for more upward momentum is in small caps. If we can get more movement out of this area of the market, we have a real good shot at giving this rally some new legs to run on.
iShares Russell 2000 ETF (IWM)
Since that is the case, the ETF on our watch today is the iShares Russell 2000 ETF (IWM). Yesterday, the ETF put on an impressive performance, climbing from 179 to 184. If this strength continues, this would be a great ETF to get long on.
However, your entry is going to matter a lot here. Look for a good spot to enter in order to get the most out of this trade. Ideally, you would want to see some kind of pull back and retest of a key support level. Where is that key support level? Well, our first place to look would be around 183, however, the 50% is sitting right below 182, which would present a better risk vs. reward for traders looking to trade this ETF.
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