IWM: small-cap firms at risk as prices decline (27/09/2023)
Recently, small-cap companies, in particular, have been adversely affected by the Federal Reserve's interest rate hikes. The Russell 2000 index is down 7% since the beginning of September. According to Ned Davis Research, 30% of the companies in this index have floating interest rates on their debt obligations. In contrast, only 6% of firms included in the S&P 500 index have borrowed funds under similar terms. This explains why small-cap companies are the most vulnerable to the tight monetary policy of the American Central Bank.
Considering these developments, it might be interesting to examine instruments that reflect the value dynamics of small-cap companies. Today, our focus is on the IWM ETF chart (NYSE: IWM), which invests in companies comprising the Russell 2000 index.
On the D1 timeframe, resistance has formed at 178.50, with support at 177.05. This level was broken through on Monday 25 September 2023, and a new support level has not yet been established. There is also a clear downward trend on the H1 timeframe. The price could drop to 168.25 in the short term and to 162.45 in the medium term.
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Ideas and other content presented on this page should not be considered as guidance for trading or an investment advice. RoboMarkets bears no responsibility for trading results based on trading opinions described in these analytical reviews.
The material presented and the information contained herein is for information purposes only and in no way should be considered as the provision of investment advice for the purposes of Investment Firms Law L. 87(I)/2017 of the Republic of Cyprus or any other form of personal advice or recommendation, which relates to certain types of transactions with certain types of financial instruments.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.87% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Considering these developments, it might be interesting to examine instruments that reflect the value dynamics of small-cap companies. Today, our focus is on the IWM ETF chart (NYSE: IWM), which invests in companies comprising the Russell 2000 index.
On the D1 timeframe, resistance has formed at 178.50, with support at 177.05. This level was broken through on Monday 25 September 2023, and a new support level has not yet been established. There is also a clear downward trend on the H1 timeframe. The price could drop to 168.25 in the short term and to 162.45 in the medium term.
—
Ideas and other content presented on this page should not be considered as guidance for trading or an investment advice. RoboMarkets bears no responsibility for trading results based on trading opinions described in these analytical reviews.
The material presented and the information contained herein is for information purposes only and in no way should be considered as the provision of investment advice for the purposes of Investment Firms Law L. 87(I)/2017 of the Republic of Cyprus or any other form of personal advice or recommendation, which relates to certain types of transactions with certain types of financial instruments.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.87% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.