End of June update:
Today, IWM / Russell 2000 closed at $187.27, the final weekly close in June 2023, and a monthly and quarterly close. IWM closed June 2023 right at its .618 Fib retracement (yellow / gold line)) shown on the primary chart—actually, a few cents (.16) above this level. But IWM closed below its prior swing high from June 14, 2023. This post initially came when IWM traded at $182.09 on the daily / weekly close June 2. Over the next four weeks in June, IWM saw a price range that was fairly narrow: $178.44 to $189.24. So little progress has been made with a lot of ups and downs in between the start and end of June. This is consistent with the choppy, sideways, and range-bound price action that has characterized this small-cap index for 1.5 years.
IWM / Russell 2000 gained about 3.48% in June. While at first glance, this seems impressive, this index remains the laggard among the four US majors. IWM remains below its earlier YTD highs from February 2. In fact, even given the strength this week, it remains below mid-June highs.
Importantly, IWM remains below its all-time high anchored VWAP as well as its February 2, 2023, swing high. But it remains above its 200-day MA. Yet IWM has been chopping both above and below its 200-day MA since November 2022 (8 months ago). This is typical of a sideways, range-bound price dynamic, as argued in the original post.
Little has changed since the start of June 2023 when this post was first published. The long-term 1.5-year trading range has not been altered. It remains unchanged and even untouched for the entire month of June. See the large blue rectangular support and resistance zones portrayed on the primary chart. And the updates this month have tracked failures at key levels within this long-term trending range, and pointed out levels that must be overcome / breached for progress in either direction.
In short, this index’s performance aligned with the sideways / ranging thesis discussed on June 2 above. This still remains a problematic breadth / liquidity warning for the long-term view across indices and sectors. Yet trend followers in the SPX and NDX have done well to ignore breadth, liquidity, yield curve inversions, and more—by focusing just on the trend in the strongest areas, they may have caught some big moves. But will they protect those profits in time? Have too many now piled in the last 5% of the moves to make them weak and top heavy? Does IWM play more catch up or does it suggest the party will end? Let me know your thoughts—it’s definitely worth considering even for those who are broad trend followers in the US major indices. If an index more subject to liquidity problems severely lags and goes sideways when other indices rally hard on narrow breadth, is this a canary in the coal mine for what may be coming?