Small Cap Stock Update – September 29, 2017 …

Small caps are up 2.45% so far this week and 5.8% so far for the trading month that is going to end today at the close … no problems here with this stock sector – move along please!!

Russell 2000 Index ETF (IWM) – Weekly Chart

Price has been following the upper resistance line on the broadening pattern that I have been tracking on the small cap index ETF (IWM) … this week’s strong push by the small cap index is creating a break higher that has all the look of being successful.  What has caused this strong move?  To me, it seems like the hope of tax reform/tax cuts is behind the latest move of the small cap sector.

Russell 2000 Index ETF (IWM) – Daily Chart

The daily chart shows the strong move this week that has pushed above the weekly broadening price pattern.  You can see that the break-out of the R/S indicator, has been accompanied by a break in R/S momentum above its last pivot high.  To me, that confirms the break higher in small caps.

Russell 2000 Index – Equal Weigthed ETF (EQWS) – Weekly Chart

The equal-weighted market cap ETF for small cap stocks has also broke-out here.  To me that supports a futher move higher.

Bottom Line – Has the market rotated away from the mega-cap “FANG” darlings and into small caps as the last major thrust in the stock market that could take us well into the fourth quarter that begins next week?  I think that is indeed a very possible scenario, and means that small caps are likely to keep pushing into at least the beginning of the Q3 reporting season/monthly OpEx in 3 weeks.

Cheers … Leaf_West


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