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Small Caps Breakout, But Every Friday This Happens

Published 02/14/2020, 12:18 AM
Updated 07/09/2023, 06:31 AM

Today, the Modern Family’s Grand Dad (NYSE:IWM) broke out of the 6-day range I’ve been highlighting.

It was also the only index to close over yesterday’s high.

This is bullish action, and now the question is…

Can IWM play catch up, or better, begin to take a leadership role by moving out to new highs?

The last time the IWM attempted to break out of a compression pattern it was also on a Thursday (1/16). This not surprising as you’ll read later.

Unfortunately for IWM, Thursday has not been a good day to breakout.

Since the beginning of 2020, all but one Friday has closed lower in the SPY (NYSE:SPY).

IWM has a perfect record of closing lower on every Friday this year.

From another perspective, the SPY (NYSE:SPY) has gained 18 points this year but lost over 9 points during Fridays.

Mathematically, this would suggest that if we had a 4-day work week with the markets closed on Friday, stocks would be twice as high for the year.

On the surface that makes sense, but in reality, the market doesn’t work that way.

This pattern is most likely attributable to fear of negative news occurring over the weekend (i.e. coronavirus news).

This thesis supported by the fact that the TLT’s have done the opposite as the SPY (NYSE:SPY). The TLT has closed higher in all but one of this year’s Fridays. Traders feel safer owning bonds.

So if traders are nervous about the weekend, then being closed on Friday’s would only push Friday’s weakness back to Thursday.

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More importantly, if you’re looking for IWM to continue its breakout tomorrow, don’t be disappointed if it doesn’t happen.

After all, it’s Friday, and it’s a long weekend. That can be even scarier.

We’ll likely have to wait until next week to see if this breakout is for real.

Until then, the key level to hold is 167.

And, if we get strong up day tomorrow, that would be very bullish longer term.

Finally, you may be wondering what the best performing day of the week has been this year…

Thursday has been up every week this year in SPY (NYSE:SPY) and all but one in the IWM.

S&P 500 Touched all-time highs. Support area is 334.20 to 333.

Russell 2000 (IWM) Broke out of the range from 50-DMA at 164.68 to 168. All time high is 170.56. Support at 168.30 and 167.11.

Dow (NYSE:DIA) Didn’t touch new high. Today’s low is 294 support. More support down to 293. Then 290 is the major support to watch.

Nasdaq (NASDAQ:QQQ) Another move to new highs. Support range is 230.30 to 228.40. Must hold 228.

KRE (Regional Banks) Range to watch is 10-DMA, 55.36 to 57.36.

SMH (Semiconductors) New high close. Support at 150 then in the area of 148.50 to 147.

IYT (Transportation) Tried to break out of the 193.48-197.30 range. Needs to close well above 197.50 to break free.

IBB (Biotechnology) Consolidation right under new high range. Range to watch is 123.60 to 121. One of the better-looking sectors right now.

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XRT (Retail) Inside day. Watch for a confirmation move over 45.25. Support at 43.75, and then 42.90.

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