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Small Caps IWM, Breakout Near Failure

|Includes: iShares Russell 2000 ETF (IWM)

It is not looking good on the bull side of the iShares Russell 2000 ETF (NYSEARCA:IWM).

The weekly chart below shows the decay in upward momentum that has been taking place over the past six-months or more.

Last week was an attempted breakout to new highs that now appears to be near failure.

A failed move (whether up or down) can be one of the most dramatic in the market: Those on the wrong side of the trade are trapped and must take action quickly or be paralyzed with fear and ultimately sell at a capitulation.

IWM Weeky

Chart by StockCharts

As always, price action may make a recovery and continue a push to new highs. At this point, that appears to be a low probability.

Once price action in the Direxion Russell 2000 Bear 3X ETF (NYSEARCA:TZA) moves into the 14.25 - 14.50 area, we will be able to say that a reversal has been confirmed.

Disclosure: The author is long TZA.