Feeble Inside Day for IWM

Yesterday's low in IWM hit my lower target zone exactly, but despite today's 2.1% upmove- second to the QQQ's 3.3% recovery, let's notice on the attached Daily chart that the IWM +2.1% is barely noticeable. In fact, today's range represents a relative feeble "Inside Day" compared with yesterday huge Red Candle. Clearly, the Small Cap ETF has its work cut out before triggering new buy signals.

One tangential relationship that might be impacting the trajectory of IWM is HYG, the High Yield Bond ETF. Notiec on the attached daily chart that HYG has carved out a massive 2+ year distribution top formation that is dangling above a potentially severe downturn period. Many of the Small Cap companies rely on financing in the high yield bond market, incurring higher rates to borrow money. If there is a growing perception in the market that hints at an economic slowdown, then HYG and IWM suffer coincidentally.

10 25 18 IWM Day 2 PM GIF
10 25 18 IWM Day 2 PM GIF
10 25 18 HYG Day 2 GIF
10 25 18 HYG Day 2 GIF
  • Action-Oriented Trade Set-Ups in Stocks & ETFs
  • Macro Analysis of the Broader Markets
  • Detailed Technical Guidance for each Trading Idea
  • Live Interaction w/ Mike & Our Member Community
  • And Much, Much More!
Join Now! - Special Offer!
Veteran Wall Street analyst and financial author, Mike provides detailed and timely analysis and trade set-ups on a range of markets. Read more...

Have Mike's “Out Front” morning analysis delivered FREE to your email inbox twice weekly!