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On December 18th, 2024, the Small Caps as seen through the lens of our Granddad Russell 2000 IWM, crashed. 

Why? 

Mainly due to the Federal Reserve’s hawkish rate cut and talk of maybe only 2 rate cuts in 2025. 

IWM is extremely interest rate sensitive. 

However, from a technical viewpoint, IWM tested major support on both the weekly and daily chart timeframes.  

Weekly, the price tested and held the 50-week moving average. 

On the Daily chart, IWM tested and held the 200-DMA. 

That low was established on January 13th and has become the low for the January 6-month calendar range reset. 

Now, IWM clears the January 6-month calendar range high, which we have been talking about incessantly as the great buy opportunity once an instrument clears it. 

So, what is next? 

I ended with the weekend Daily discussing that the calendar range also offers a minimal amount or risk if trading or investing. 

Using the low of Tuesday the 21st, $226.99 or just below the extremely pivotal $227 now should hold. 

Plus, IWM still needs to clear the 50-DMA just overhead at $230.60. 

Nonetheless, we see the calendar range breakout more significant right now. 

Leadership or our Triple Play indicator supports the breakout. 

Momentum has yet to take off, which is why we prefer a tighter risk out of the gate. 

Incidentally, this is how one should analyze any instrument at this time of the year.  

Remember, the odds of a follow through is high and the risk in nominal. 

ETF Summary  

(Pivotal means short-term bullish above that level and bearish below)  

S&P 500 (SPY) 599.70 now must hold 

Russell 2000 (IWM) 227 now must hold 

Dow (DIA) 433.38 now must hold 

Nasdaq (QQQ) Still has not cleared the January calendar range high 

Regional banks (KRE) A move over 64.25 compelling  

Semiconductors (SMH) 260 now support as this finally edges past the calendar range high 

Transportation (IYT) 71.16 important to hold 

Biotechnology (IBB) 137 key to clear for a further rally  

Retail (XRT) Better but not convincing yet-81 must clear 78 must hold 

iShares iBoxx Hi Yd Cor Bond ETF (HYG) Junk bonds super happy  

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