The small-cap space has been considered one of the “safe haven” trades this year, especially to combat the tariff concerns. The Russell 2000 Index had been up over 13% heading into September as compared to 8.5% for the large-cap S & P 500. But recently the small-cap space has lagged and in fact, with the recent sell-off, dropped right down to its 200-day moving average.
The iShares Russell 2000 ETF, or IWM is a fantastic product to trade the small-cap space. It has huge open interest, tight markets and is extremely liquid. Take a look at this chart:
Each time that IWM declined down to the blue line (the 200-day moving average), the ETF rebounded. Will history repeat itself?