Stock Market Dilemma: Transports, Small Caps May Have Topped
Chris Kimble | Dec 01, 2021 04:57PM ET
Two extremely important sectors to the economy and U.S. equities market are struggling.
And investors should take notice.
The Transportation Sector ETF (iShares Transportation Average ETF (NYSE:IYT)) small cap Russell 2000 (iShares Russell 2000 ETF (NYSE:IWM)) are two sectors bulls would like to see continuing higher. But today’s long-term monthly charts give reason for pause – and perhaps a warning to equity investors.
As you can see in today’s 2-pack, the RSI (Relative Strength Indicator) is producing lower highs for both Transports (IYT) and small caps (IWM) at each point (1). And this comes while both IYT and IWM could be double topping at each point (2).
More worrisome, however, are the monthly candles. November produced an out-sized bearish reversal candle for each. This will create a lot of overhead supply and could stunt rally/bounce attempts.
I humbly think investors need to be aware of how these patterns play out – especially considering the economic importance of small-cap and transportation companies.
What would be a dream come true for the bullish case? The upward trend continues and both breakout above the highs of several months ago.
What happens next could affect your portfolio. Stay tuned!
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