AVSC - IWM: Technical Analysis Says You Should Buy Small Caps
2024-02-11 23:58:45 ET
Summary
- iShares Russell 2000 ETF tracks small-cap US stocks, which come with high risk and reward potential.
- The ETF has shown volatility and suffered from the Fed's rate hikes in 2022 but is now ready to re-take its 13-week and 52-week highs.
- Technical indicators suggest a buying opportunity for IWM, but investors should be aware of the sector's inherent volatility and idiosyncratic risks.
- Major indicators discussed include momentum, trend-following, and volatility measurements.
Introduction
The iShares Russell 2000 ETF ( IWM ) tracks a basket of the largest 2000 small-cap US stocks. Small-cap stocks are typically riskier than their large-cap and mega-cap peers in the S&P 500, since they typically have less cash to deploy in times of need, are more sensitive to economic cycles, and have a significantly higher rate of failure due to their smaller nature.
They also come with great reward for getting in early.
Here are the index's top holdings and their performance over the last few years so you can see what kind of risk and reward scenarios you're looking at with small caps. When they win, they win big....
IWM: Technical Analysis Says You Should Buy Small Caps