My analysis suggests both the Small and Mid Cap Indexes may have moved excessively lower over the past 30+ trading days. They may be poised for a unique opportunity and a substantial price rally if the global markets continue to move away from extreme risk events. As the global markets move away from recent concerns of war and Fed rate hikes, I believe both Small and Mid Cap indexes are uniquely positioned to potentially surge 7% to 11%, or more, from recent lows.
As the US Fed and global central banks position to combat inflation while war tensions build near Ukraine, I believe the US Small and Mid Cap Indexes are uniquely undervalued and ready for a potential move higher. The recent recovery in the US major indexes may be evidence of strong bullish price momentum underlying the US Major Indexes. I believe that foreign capital is moving into various US assets to avoid foreign market/currency risks.
IWM May Rally 12 to 14% - Targeting $238 to $240
This Weekly Russell 2000 (NYSE:IWM) chart highlights a support level near $191.00 and a recent Three River Morning Star bottom reversal pattern near $194.40. It also highlights the previous range-based trading and dual Pennant/Flag setups using shaded BLUE and YELLOW Rectangles.
I believe IWM has a solid potential to rally back to near the $220 level before finding resistance (+7.25%). If this bullish price momentum continues, IWM may rally to levels above $238 to $240.
The global markets may have recently focused too much on the US Fed and Global Central Banks while missing the underlying strength of the US economy. Consumers are still spending, and the US Fed has yet to make any substantial adjustments to rates or balance sheets.
These recent lows may provide an excellent opportunity for traders to capitalize on a “reversion price move” soon. The only way to navigate and capitalize on these price swings is to stay focused on Technical Analysis and strategic opportunities for trades when they occur.