Morpheus Trading: Over the past several weeks, we’ve been discussing the increasing relative strength in small-cap stocks, compared to the rest of the broad market, and that bullish divergence continues to widen.
Despite the blue-chip Dow Jones Industrial Average ($DJI) falling 0.8% and closing well below key support of its 50-day moving average yesterday (September 30), the small-cap Russell 2000 Index ($RUT) was unchanged.
More importantly, the Russell 2000 sits less than 1% below its all-time high.
Furthermore, both the small-cap Russell 2000 and NASDAQ Composite printed bullish reversal candlesticks on higher volume yesterday.
This means that a move above the intraday high of those candlesticks could easily lead to a breakout to new record highs in short order.
However, if the intraday lows of those reversal bars are violated within the next few days, we could potentially see a few more weeks of backing and filling.
Below are daily charts of the iShares Russell 2000 Index ETF (NYSEARCA:IWM) and the NASDAQ Composite Index:
Because of yesterday’s bullish reversal action and increasing relative strength of the small-cap Russell 2000 Index, we are placing Direxion Daily Small Cap Bull 3X ETF (NYSEARCA:TNA) on today’s “official” swing trade watchlist.
If the uptrend in the small-cap Russell 2000 resumes in the coming days, bullish momentum could easily spark a sharp, multi-week advance in small-cap stocks. As such, a long position in $TNA would be ideal to take advantage of such a fast-paced move. However, it’s important to note one key point when buying $TNA.(...)Click here to continue reading the original ETFDailyNews.com article: Looking For The Uptrend To Continue For Small Cap ETFsYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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