September 1, 2021
By Mish Schneider
Written by Forrest Crist-Ruiz
Recently the small-cap index Russell 2000 (IWM) cleared $225.
This was a main resistance level dating back to early August.
Now that IWM had cleared resistance, will it make new highs?
One way we can judge the odds of IWM’s continued rally is by checking its underlying momentum using Market Gauges Real Motion indicator.
While IWM has been trading near its 50-Day moving average (Blue Line) for most of the year, the 50-DMA on momentum has been trending down.
Real Motion (dotted maroon line) has also shown weak momentum as it has consistently stayed under the 50-DMA.
Having said that, currently RM is close to clearing the 50-DMA.
What makes this even more important is that the last time IWM attempted to clear its $225 resistance level in price, RM was not close to its 50-DMA.
This showed a disconnect between price and RM.
Now RM is about to attempt a break of the moving average with price leading higher.
If RM does clear the 50-DMA, this will greatly increase the chances IWM can break to new highs as it shows that momentum is following the price action.
With that said, if RM does not clear the 50-DMA this could be telling us that IWM could begin to struggle and may need more consolidation time before it is ready to push to new all-time highs.
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S&P 500 (SPY) 447 support level.
Russell 2000 (IWM) Like this to hold over $227.
Dow (DIA) 356.60 high to clear. 351 support.
Nasdaq (QQQ) 375 support area.
KRE (Regional Banks) Needs to stay over the 50-DMA at 64.31.
SMH (Semiconductors) 263.86 minor support area.
IYT (Transportation) Watching for a bullish phase change over the 50-DMA at 255.47.
IBB (Biotechnology) Cleared minor resistance. Needs to hold 174.
XRT (Retail) Needs to get over 97 and hold.
Junk Bonds (JNK) Watching to stay over 50-DMA at 109.51.
IYR (Real Estate) Nice break out over consolidation area.
XLP (Consumer Staples) 71.29 support. High to clear 73.25.
GLD (Gold Trust) Holding over the 200-DMA.
SLV (Silver) 21.62 support level.
XME (S&P Metals and Mining) 43.28 support area from the 50-DMA.
USO (US Oil Fund) 48.50 resistance from the 50-DMA.
TLT (iShares 20+ Year Treasuries) 150.80 resistance.
USD (Dollar) Doji day.
DBA (Agriculture) 18.80 next support.
VBK (Small Cap Growth ETF) Breakout over 293.
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