As the S&P 500 and the NASDAQ rally into the green for the year, the Russell 2000 (aka the small cap index) has lagged behind and is barely green at +1.03% YTD for 2023. One of the reasons why this index hasn’t been doing well can be attributed to the index’s 15.18% allocation in the Finance Sector. Failing regional banks such as Silicon Valley Bank (NASDAQ:SIVB) and Signature Bank (
SBNY
) haven’t helped the index much.
Investors who would like to play the Russell 2000 should pay attention to the 5 major sectors that makes up 73.23% of
IWM
: Health Care (17.62%), Industrials (16.66%), Financials (15.18%), Information Technology (12.74%), and Consumer Discretionary (11.03%).
Technical Analysis:
IWM
recently formed a Death Cross (50 SMA x 200 SMA) on the daily chart in mid April. Although not very clean, there is a support uptrend line dating back to October 2022. Also, it seems like we have a head and shoulders pattern, using the Daily 170.30 level as the neckline.
Bulls will want price to reclaim the weekly 178.90 level as a support.
I lean bearish on this index. If
IWM
can’t reclaim the two daily gaps above, at 176.74 - 177.42 and 180.53 - 181.28, I expect it to come down and test the yellow uptrend line and potentially break it to the downside in the coming weeks.
Upside Targets: 176.74 → 177.42 → 180.71 → 181.28 → 183.76 Extended: 186.91
Downside Targets: 174.09 → 172.33 → 171.41 → 170.30 → 169.32 Extended: 166.81
SBNY
) haven’t helped the index much. Investors who would like to play the Russell 2000 should pay attention to the 5 major sectors that makes up 73.23% of
IWM
: Health Care (17.62%), Industrials (16.66%), Financials (15.18%), Information Technology (12.74%), and Consumer Discretionary (11.03%). Technical Analysis:
IWM
recently formed a Death Cross (50 SMA x 200 SMA) on the daily chart in mid April. Although not very clean, there is a support uptrend line dating back to October 2022. Also, it seems like we have a head and shoulders pattern, using the Daily 170.30 level as the neckline. Bulls will want price to reclaim the weekly 178.90 level as a support.
I lean bearish on this index. If
IWM
can’t reclaim the two daily gaps above, at 176.74 - 177.42 and 180.53 - 181.28, I expect it to come down and test the yellow uptrend line and potentially break it to the downside in the coming weeks. Upside Targets: 176.74 → 177.42 → 180.71 → 181.28 → 183.76 Extended: 186.91
Downside Targets: 174.09 → 172.33 → 171.41 → 170.30 → 169.32 Extended: 166.81