You all remember the patriarch of the Modern Family-Granddad Russell 2000 or IWM?
He gained that distinction as most of the 2000 small cap stocks in his index represent U.S. companies-an excellent barometer for the US economy and market sentiment.
Its top holding is Nektar Therapeutics NKTR. That stock, in the Health care field, rocketed at the end of 2017 after forming a 16-year base.
Next is Bluebird Bio Inc., also in the Health care field. BLUE does not have NKTR’s history. And, it has recently corrected from the all-time highs.
Some of the other top 10 holdings include GrubHub Inc., (GRUB), Curtiss Wright Corp (CW), Aspen Technology inc. (AZPN) and MKS Instruments Inc. (MKSI).
GRUB is near the all-time high. CW, AZPN and MKSI are not giving us a good risk/reward picture.
My faves, just because they’re sexy, are World Wrestling Foundation, La-Z-Boy, FTD Florist and Frontline for dogs.
Of those companies, the most beat-up of the bunch and the most promising is Frontline-FRO.
But that’s another story for another time.
The chart looks at IWM in 3 timeframes. Daily, weekly and monthly.
All 3 timeframes are in bullish phases. That contrasts with the S&P 500 and the Dow, both in Warning Phases on the Daily charts.
The Daily in IWM has it sitting right on the 50 daily moving average. That comes in at 154.75.
The Weekly has IWM well above the 50-week MA.
The Monthly chart shows IWM in a strong uptrend ever since 2011 when it cleared the 80-month MA.
Today’s action is an inside day-when the trading range is literally inside the trading range of the day prior.
If we layer all 3 timeframes together, IWM must hold the 50-DMA first and foremost. If it does, and clears back over 158-159, a much better sign for the bulls and the market.
If IWM joins SPY into a Warning phase, we look to the weekly for major support at 146.50.
And, if that levels breaks, well, I cannot even imagine the carnage if IWM falls to 112.
Semiconductors got a bit closer to the miracle if it clears 111.
The dollar regained strength and entered into an unconfirmed recovery phase.
The long bonds lost more ground in anticipation of tomorrow’s FED meeting.
Granddad may be old (and cute), but he still has to keep going to help this market stay intact.
If not, his tired wife, Granny Brick and Mortar Retail (XRT), could expect a visit from her frustrated hubby.
And he might be carrying gifts-a bunch of flowers, carried by a flea-free dog.
S&P 500 (SPY) If this cannot regain 275, could see 265 next. Eyes on FED
Russell 2000 (IWM) 154.75 support, 156 pivotal and 158 point to clear
Dow (DIA) 250 pivotal area. 242 support.
Nasdaq (QQQ) 166 50-DMA.170 resistance-the only index above the 6-month calendar range
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