Small-Cap ETF Turned Away at Multiyear Resistance

ETF Trends

Will the third time be the charm for the small-cap iShares Russell 2000 ETF (IWM)?

The small-cap fund was recently turned away from a key horizontal resistance line that has triggered sell-offs starting in 2007 and 2011.

“The 850-870 range has become tough resistance for the Russell 2000 index over the past five years. Each time this level was reached and support was taken out, small caps fell in price,” says technical analyst Chris Kimble at Kimble Charting Solutions.

Small-caps stocks have been lagging the S&P 500 since mid-September.

IWM is also trailing large-cap stocks in 2012. The small-cap fund is up 11.3% year to date, compared with a 14.3% advance for the S&P 500, according to Morningstar. [Small-Cap ETFs May Signal Big Trouble for Market]

This is the third time the small-cap ETF has tried to break through horizontal resistance in the past five years.

iShares Russell 2000

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small-cap-etf

Full disclosure: Tom Lydon’s clients own IWM.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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