Small Cap IWM Threatens To Break Important Technical Support

May 11, 2017 11:33am NYSE:IWM

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Large and Small-Cap U.S. equities have had some bloodletting lately, with the speedbump that the markets have had, as we have seen a substantial $9 billion leave SPY (SPDR S&P 500, Expense Ratio 0.09%), as well as over $1.2 billion flood out of IWM (iShares Russell 2000, Expense Ratio 0.20%).


IWM notably is getting hammered in early trading today, down more than 1.2% and threatening to blitz through mid-April support (and its 50 day MA is not far below at $136.86). In terms of IWM, very near term May 138 puts (which expire next Friday) have been in vogue, and these options are now in-the-money at the moment with the pressure in Small Caps today.

The Bear-levered fund TZA (Direxion Daily Small Cap Bear 3X) should be monitored closely in the near term, as the fund has attracted modest assets year-to-date ($247 million) via inflows. The 2017 inflows in TZA, which include over $167 million in the trailing one-month period, make up a significant portion of the fund’s overall asset levels presently which is about $722 million.

IWM traded near its 50 day MA six trading sessions ago before rebounding a bit into yesterday’s trading, but today’s selling pressure threatens to bring it back to April levels. IWM has a long tenure in ETF land, and actually will be celebrating its 17th birthday of trading live on May 22 of this month, having debuted back in 2000.

IWM continues to rule the “Russell 2000” tracking space in the U.S. ETF listed landscape, at $38 billion in AUM, but Vanguard’s offering in this segment VTWO (Vanguard Russell 2000, Expense Ratio 0.15%) recently eclipsed the $1 billion in AUM mark with minor inflows year-to-date. SPDRs also have an entry in the Russell 2000 space with the $200 million TWOK (SPDR Russell 2000, Expense Ratio 0.10%).

It is helpful from time to time to examine the underlying index composition of the Russell 2000 as well, for being a market-capitalization weighted device, it will of course change materially from time to time. Presently, top holdings are as follows: 1) AMD (0.40%), 2) CC (0.39%), 3) TTWO (0.34%), 4) LOGM (0.32%), and 5) MSCC (0.29%).

IWM-2017-05-11

The iShares Russell 2000 Index ETF (NYSE:IWM) was trading at $138.21 per share on Thursday morning, down $1.00 (-0.72%). Year-to-date, IWM has gained 2.49%, versus a 6.82% rise in the benchmark S&P 500 index during the same period.

IWM currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 30 ETFs in the Small Cap Blend ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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