The Russell 2000 ETF Could Hit a Key Price Soon

The slow trading yesterday didn’t keep buyers away. We saw breakouts galore in the major indexes yet again, with the S&P 500, Nasdaq, financials, and the semiconductor sector leading the way. Winners remain the winners and continue to gain the lion's share of fund allocations.

But what was most surprising is we actually have small caps participating in this breakout.

The iShares Russell 2000 exchange-traded fund IWM continued its strong move from Friday. It now approaches its September high. A close above $224 moves IWM into a zone with little — or even no — upside resistance. The late July high, as seen on the chart below, represents the high point of the past 52 weeks for the Russell 2000. A push above that level would be the highest price IWM has seen since late 2021.

IWM’s breakout from a good-sized bullish channel should have small-cap bulls optimistic. While the 10-day and 21-day exponential moving averages (EMAs) haven’t been support levels, they have been a good key for direction. With both EMAs trending higher and the short-term 10-day moving average above the 21-day moving average, the technical setup remains strong.

Big Move for MicroStrategy

MicroStrategy MSTR, which I wrote about earlier this month, exploded higher Monday morning, touching $227 intraday, a huge push from Oct. 7, when I discussed the stock. 

Unfortunately, the celebration was short-lived as MSTR reversed sharply from Monday’s highs to finish just above $200, a $26 intraday reverse.

While this doesn’t change the monthly bullish outlook, it should give short-term traders pause. It is also a reminder that quick pops of 15% to 20% in a matter of days or a few weeks still deserve some partial profit-taking considerations. Again, nothing has changed on the monthly view, but this reversal has me keeping a closer eye on MSTR.

At the time of publication, Byrne had no positions in any securities mentioned.