October 25, 2011
Shares of the small cap ETF Ishares Russell 2000 Fund (NYSE: IWM) broke out to new correction highs on Monday, October 24, closing well above the prior August 30 closing high.
IWM has lagged the other major indexes, and over the past two weeks shares were stalled at about the $71.30 level.
IWM also closed above the initial resistance level, the 50% retracement of the entire August September correction.
For IWM it was more than a correction with the index shedding some 27% at its lows.
IWM needed to join the advance as this index of small cap stocks is crucial to the health of any rally.
Although many look at IWM as being dominated by individual investors, our experience tells us that strength in this index tends to lead the stock market higher.
IWM should soon reach the next resistance level at $76.04. A decisive close above this level would point to a run for the prior July highs.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy holds a position in the Ishares Russell 2000 Fund.