Wednesday, the small cap Russell 2000 ETF (IWM) made a divergence in price and our momentum indicator Real Motion (RM).
In the above chart we can see that while price has broken underneath the 50-Day moving average (blue line), it has yet to break the 50-Day moving average in Real Motion (red dotted line).
With that said, this could be an opportunity for stock pickers to base trades off this hidden support level.
When it comes to watching the small-cap index ETF (IWM), we have a very cut-and-dry situation.
If IWM breaks lower, RM will likely follow as it’s sitting at a weak spot and barely holding the 50-DMA.
On the other hand, if IWM stands its ground, we can look for potential buying opportunities.
With that said, of the 7 symbols we watch within Mish’s Economic Modern Family of ETFs, the biotech Sector ETF (IBB) is holding up surprisingly well as the market has pulled off.
Moreover, if IWM holds its current point in price and momentum, we could also look for a quick pop in the biotech space.
One biotech company we have on our watchlist is Biogen (BIIB).
Sitting just below its 50-DMA in price, BIIB has a positive divergence because RM is over the 50-DMA while the price is not.
Therefore, if BIIB can clear and close over roughly $212, it would confirm that price and momentum agree and show it’s potentially ready for another move higher.
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Stock Market ETFs Trading Analysis and Summary:
S&P 500 (SPY) 447 did not hold. Now we watch to clear back over or for 441 to hold.
Russell 2000 (IWM) Needs to hold over 201.
Dow Jones Industrials (DIA) 343 needs to hold.
Nasdaq (QQQ) 350 support.
KRE (Regional Banks) 66.81 support could not hold. 65.46 next level to test.
SMH (Semiconductors) 237 next main support. In choppy area.
IYT (Transportation) 243 – 245 support area.
IBB (Biotechnology) 128 support the 50-DMA.
XRT (Retail) Like this to get back over 75. If not watch for 72 area to hold.
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.
