Thursday, December 09, 2021

Russell 2000 ($IWM) target of $195

It's looking more likely that we will see measured moves lower across lead indices.  The Russell 2000 is the most vulnerable, and has the the deepest measured move target of $195 from the ETF ($IWM). It should be noted, should the Russell 2000 reach this target it would only fall back to where the index traded this time last year, and well above breakout support of $165. The Covid low of 2020 was clearly a good buy (as noted in the tables you see below this article), the next low (if it reached is measured move target) will be another.




While measured moves are likely for the Nasdaq and S&P, because their respective bounces came close to challenging recent highs, any measured move will only go as far as to establish a trading range. It's a relatiely neutral stance and it would likely take a collapse in the Russell 2000 to deliver anything more than that. 

We can see that a measured move target in the Nasdaq would take it very close to its 200-day MA. This convergence increases the probability for this outcome.


The S&P has a measured mve target very close to the November swing low. Again, convergence of support increases the probability of this outcome.  Technicals are mixed, but both ADX and MACD are close to new 'buy' triggers.


For the record I have included the Dow Industrials. It's measured move target is down at the June swing low and woud effectivey confirm the trading range should the index make it there. 


Aside from the Russell 2000, each index has a well defined measured move target lower. There is a good chance the rest of the year will be spent reaching these targets.  On the bright side, these targets are not particularly damaging - especially for those who bought the 2020 sell off. Lots of bluster, not much substance.  If these targets are reached it will offer a buying opportunity for those willing to take the plunge. 

You've now read my opinion, next read Douglas' blog.

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Investments are held in a pension fund on a buy-and-hold strategy.

 
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