As the world’s top investment manager, I have been closely watching the recent performance of the market. Small-cap stocks, represented by the Russell 2000 (IWM), have been on fire lately. The chart shows a remarkable rally, breaking through resistance to hit a new 6-month high.
This surge in small-caps could indicate a broader uptrend in the market. The leadership chart confirms this bullish sentiment, with IWM outperforming the benchmark. Additionally, momentum, as indicated by Real Motion, is keeping pace with the price movement.
In January 2022, IWM reached 227 before experiencing a significant downturn. This level is now a key point to watch. If IWM corrects, the July range high provides support at 218-219.
Until we see a bearish divergence in momentum or a breach of the July range support with momentum holding, the current strategy is to stay the course and ride the momentum.
ETF Summary
- S&P 500 (SPY): New all-time highs with 5600 as a crucial level
- Russell 2000 (IWM): Watch the 227 level after January 2022 rally
- Dow (DIA): Achieving new all-time highs
- Nasdaq (QQQ): Working towards 500 pivotal level
- Regional banks (KRE): 55 now acts as support, with 60 as the next level to monitor
- Semiconductors (SMH): Trading in the 260-280 range
- Transportation (IYT): Support at 67
- Biotechnology (IBB): Resistance at 152
- Retail (XRT): Support at 77.50
- iShares iBoxx Hi Yd Cor Bond ETF (HYG): Reaching multi-year highs
In conclusion, the current market conditions favor small-cap stocks, with the potential for a broader market upswing. Investors should keep a close eye on key levels and maintain a watchful stance until a clear shift in momentum occurs. Stay informed and make strategic decisions to capitalize on the market opportunities.