You thought that you lived on Planet Earth, a rock and water ball orbiting the sun. And while that is true, it has morphed over the 6 billion years it has been around. Right now, for us humans, it looks a lot more like Planet Hype. Everything is addressed in an extreme whether it is politics, climate change, monetary policy or your love for cat gifs. If you are not careful you can get caught up in it everyday. In the stock market where I operate it is also prevalent. One example is in the Russell 2000 Index.
The small cap index is either the leader that will carry the markets higher or a drag and about to crash them lower every day. Sure the Russell 2000 has had a bad week. But remember what happened the day before that bad 5 day streak? Oh, yeah it was a new all-time high. The hype has been crazy in this one. The chart of the Russell 200 Index ETF below shows that despite these swings in sentiment the IWM has done nothing but consolidate in a tight 7 point range since the beginning of December. 5 months of consolidation.
It is hard to talk about the iShares Russell 2000 (NYSE:IWM)as either a savior of markets or a catalyst for disaster with a straight face after looking at this chart. The prospects for the future are mixed with momentum as measured by the RSI continuing to hold in the bullish zone while the MACD is rolling lower. And all of the SMA’s are starting to turn flat. But this is what you would expect in consolidation. As the saying goes, there is nothing to see here, move along. Some times you need nothing more than to look for yourself at the evidence to see through the hype.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.