You all know how focused I am on the Russell 2000 (IWM) and Retail Sector (XRT) – they are important market indicators that I track in my “Economic Modern Family” of ETFs.
And, while SPY and NASDAQ soared to new highs, the Russell 2000 ETF (IWM) and Retail Sector ETF (XRT) performed well, but not near new all-time highs well.
There was a perception going in that a Trump win would be better for Small Caps.
As Trump campaigned on increasing American manufacturing, Trump policies could also improve economic conditions and growth.
Furthermore, he proposes tax cuts, which along with reshoring, help small cap US-focused business the most.
While IWM rallied up 2 times more than the other stock market indices today, and on pace to get to all-time at $244.50 the 2021 highs, it still needs to.
So, the Federal Reserve meeting could be the ultimate trigger.
Or the disappointment.
The Russell 2000 (IWM) also needs the Retail Sector (XRT) to join in.
That spectacular 10-month trading range is still intact. If XRT gets over 80, we assume that trump policies perceived as deflationary and with the FED potentially cutting rates will be great for both IWM and XRT.
The IWM chart shows a wonderful gap higher.
IWM now outperforms SPY.
Plus, the momentum improved significantly.
Can IWM keep going? So much depends on the FED and interest rates.
XRT also enjoyed a gap higher, but not nearly as pretty as IWM’s.
XRT must clear and hold above 80.00.
Furthermore, XRT outperforms SPY by a little and momentum rose but not by nearly enough.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
