With a stock market gap up on Tuesday, many traders scrambled to re-enter as they grappled with FOMO (fear of missing out). Additionally, the market was reaching a pivotal point as traders who piled in, waited for a breakout towards highs.
Looking at large-cap and big-tech indices, the S&P 500 via SPDR® S&P 500 (NYSE:SPY) and the NASDAQ 100—Invesco QQQ Trust (NASDAQ:QQQ), have both consolidated over the past 4 trading days.
Now we are watching for each to clear new highs or break under past Tuesday's low.
As seen in the above daily chart, each index looks poised to break resistance levels dating back to early November.
$470.90 for the SPY and $401.19 for the QQQ.
However, the Small-Cap index Russell 2000 via iShares Russell 2000 ETF (NYSE:IWM) could be painting a different picture compared to SPY and QQQ.
The battle of small caps vs. big caps continues with large companies beating the little guys throughout the year. Additionally, IWMs weakness has become concerning especially if it heads towards the bottom of its range.
Though large caps indices, SPY, QQQ, and SPDR® Dow Jones Industrial Average ETF Trust (NYSE:DIA) are sitting near highs, we should not ignore a potential big divergence if IWM breaks under the lows of its yearly range around $208.
Therefore, we should keep an open mind of the market’s upside potential, but also know that if IWM continues to sideline or begin to trend under $208, this could be a signal for weakness in the overall market.
ETF Summary
- S&P 500 (SPY) 473.54 high to clear.
- Russell 2000 (IWM) Watching to hold the 10-DMA at 219.72.
- Dow (DIA) 354.02 support. 365.64 highs to clear.
- NASDAQ (QQQ) 401.19 to clear.
- KRE (Regional Banks) Trying to hold the 10-DMA at 70.52.
- SMH (Semiconductors) In a choppy zone.
- IYT (Transportation) 274 to clear.
- IBB (Biotechnology) 153.38 resistance.
- XRT (Retail) 95.72 50-DMA to clear.143.25 minor support.
- Junk Bonds (JNK) Inside day.
- SLV (Silver) 20.63 gap to fill.
- USO (US Oil Fund) Like 50.72 to hold as support.
- TLT (iShares 20+ Year Treasuries) 150.48 to clear. 148.36 to hold.
- DBA (Agriculture) 19.51 support area.