On December 18th, 2024, the small cap stocks Russell 2000 Index ETF (IWM) crashed.
Why?
Mainly due to the Federal Reserve’s hawkish rate cut and talk of maybe only 2 rate cuts in 2025.
IWM is extremely interest rate sensitive.
However, from a technical viewpoint, IWM tested major support on both the weekly and daily chart timeframes.
Weekly, the price tested and held the 50-week moving average.
On the Daily chart, IWM tested and held the 200-DMA.
That low was established on January 13th and has become the low for the January 6-month calendar range reset.
Now, IWM clears the January 6-month calendar range high, which we have been talking about incessantly as the great buy opportunity once an instrument clears it.
So, what is next?
I ended with the weekend Daily discussing that the calendar range also offers a minimal amount or risk if trading or investing.
Using the low of Tuesday the 21st, $226.99 or just below the extremely pivotal $227 now should hold.
Plus, IWM still needs to clear the 50-DMA just overhead at $230.60.
Nonetheless, we see the calendar range breakout more significant right now.
Leadership or our Triple Play indicator supports the breakout.
Momentum has yet to take off, which is why we prefer a tighter risk out of the gate.
Incidentally, this is how one should analyze any instrument at this time of the year.
Remember, the odds of a follow0through is high and the risk is nominal.
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.
