Mirror, Mirror on the Wall, Are Small Caps Now the Fairest of Them All?

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This rotation into small caps and retail has been something many analysts have waited for. 

And let’s face it: 

1. IWM my Granddad Russell 2000 of the Economic Modern Family just made a new 2025 high. 
2. The momentum is strong and above the Bollinger Band 
3. The Leadership clearly shows its outperformance over the SPY. 

So, should investors be piling up on small caps? 

Maybe, but always look left.  

This is the weekly chart of IWM. 

1. The peak high was made in November 2021 at 244.46. 
2. Then, in November 2024, IWM made an all-time high at 244.98, just slightly higher than the 2021 peak. 
3. Now, in 2025, IWM remains 4% away from the all-time high. 

That makes the 2021 and 2024 tops still double tops unless that area clears. 

For now, with mom good, it is possible that IWM remains supreme. 

However, as I say, the market is only as strong as its weakest link, 

We must watch semiconductors (after Nvidia earnings) and Transportation IYT, still struggling. 

If chips or transports go from weak link to an anchor, we could see IWM fall. 

Back to the Daily chart, that is when we look at the July 6-month calendar range high as support or around 226.  

Educational purposes only, not official trading advice.  

 

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Mish in the Media-Want to see more? All clips here  

CNA Asia Nvidia, the Fed and Mom 08-26-25   

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CNBC Asia Mish talks trifecta if inflation and the all-important consumer 08-25-25  

 

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ETF Summary  

(Pivotal means short-term bullish above that level and bearish below)  

The divergence between growth and value continues to widen 

S&P 500 (SPY) 643 support  

Russell 2000 (IWM) 226 huge support  

Dow (DIA) 448 support  

Nasdaq (QQQ) 575 now resistance with 560 huge support 

Regional banks (KRE) Over the July calendar range so 64 key to hold   

Semiconductors (SMH) Watch 293 as key to hold  

Transportation (IYT) This is our weak link not even over the July range. Watch 73.50 to clear 

Biotechnology (IBB) Was doing great until some political footballing happened-now a bit of a topping reversal  

Retail (XRT) 84 pivotal and 82 key support 

Bitcoin (BTCUSD) Broke under the 50-DMA so unless it climbs back over 114 could see a move down to 105