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Are Small Caps Ready To Break Out?

Published 12/18/2014, 01:29 AM
Updated 07/09/2023, 06:31 AM

Chart 1: US small caps could be poised for a breakout on the upside…

IWM Weekly Chart

I discussed US small caps sector just recently, in an article titled “Small Caps Ready To Catch Up?.” While bears will argue that the iShares Russell 2000 Index (ARCA:IWM) is extremely expensive (and they aren’t wrong), the tape is still signalling that it wants to go higher.

This was confirmed even more so last night, with a strong breadth thrust and a huge 3% rally off the 200 day moving average. The fact that the price continues to consolidate below a major resistance zone most likely means that a breakout is in the cards sooner rather then later.

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