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IWC Review: Wait To Take A New Position

Apr. 04, 2021 6:29 PM ETiShares Micro-Cap ETF (IWC) ETF
Hale Stewart profile picture
Hale Stewart


  • The macroeconomic backdrop is positive.
  • The IWC has performed well over multiple time frames.
  • It is currently consolidating; wait until the index breaks through the upper 150s before taking a new position.

When looking at ETFs that track broad averages, I first look at the underlying economic backdrop of the macro-economy or specific economic sector. I then look at the index's charts to determine its overall trend.

Investment thesis:

The IWC is currently consolidating gains. Wait until the index breaks through the upper 150s before taking a new position.

In general, the macroeconomic backdrop is positive. According to the latest BEA GDP report, the economy grew 4.3% in 4Q20 (see here and here). The latest report from the Atlanta Fed is predicting 1Q21 GDP of 6%: The same chart also shows that the Blue Chip range of forecasts is between ~2.75% and 7%. The following table shows growth projections from the NY Fed:Although the pace for 1Q21 GDP growth has slowed, it is still a respectable 4.7%.

Zacks is predicting a solid earnings environment:

  • Total 2021 Q1 earnings are currently expected to be up +19.9% from the same period last year on +5.6% higher revenues, with a combination of easy comparisons and strong gains in a number of sectors giving us the growth rebound.
  • Estimates for the current and coming quarters have steadily moved up, a trend that has been in place since last Summer. We expect this favorable revisions trend to accelerate in the coming months as we start looking past the pandemic.
  • The positive revisions trend is broad-based, with Q1 estimates for 10 of the 16 Zacks sectors going up over the last three months and estimates for the Autos and Energy sectors more than doubling over that time period.

FactSet is predicting similar strength:

Earnings Growth: For Q1 2021, the estimated earnings growth rate for the S&P 500 is 23.3%. If 23.3% is the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth

This article was written by

Hale Stewart profile picture
Hale Stewart spent 5 years as a bond broker in the late 1990s before returning to law school in the early 2000s. He is currently a tax lawyer in Houston, Texas. He has an LLM in domestic and international taxation (MagnaCumLaude). He is the author of the book The Lifetime Income Security Solution. Follow me on Twitter at @originalbonddadYou can read his legal analysis on his law office's blog.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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