The Index Confirming (Or Rejecting) a Rally
The S&P 500 hit new all-time highs on Friday, the Nasdaq 100… yeah it did the same. Wall Street is back, right?
Wrong.
The Russell 2000 Index ETF (IWM) traded only slightly higher on Friday and is sitting 17% off its all-time highs. What’s worse is that the index is also trading in a technical bear market as the ETF is below its 20-dmonth moving average.
This is the one index we’re watching to confirm whether the market can continue its year-end rally. The IWM is sensitive to interest rates, the economy, and geopolitical concerns more than any of the other major market indices, so it’s the one to watch.
The IWM has been trading in a range of $195 and $190 since the beginning of January. A break of either level will dictate the next 5-10% directional move for those other indexes that everyone loves to talk about (SPY and QQQ).
A Giant “Sleeper”
This is the big one for me.
Intel (INTC) announces their quarterly earnings results after the close on Thursday, and I think this is one of the biggest “sleepers” in the semiconductor sector. Shares have been lagging the rest of the semis, but INTC has the benefit of the government’s plan to dramatically increase domestic chip manufacturing in their back pocket.
The Street thinks the stock is a yawner with low buy recommendations and even lower expectations on the stock’s target price. These are the types of situations where a single earnings report that could get the analysts chasing the stock price higher.
New All-Time Highs Soon
We’re seeing signs that the Fed may have avoided a deep recession, which means that we’ll start looking for growth. When economies expand they do it on the back of trucking and rail companies as more goods a raw materials start moving across the country to build the economy stronger.
J.B. Hunt (JBHT) just gave us an earnings report last week that show this type of improvement in the works, and the analysts are reacting with upgrades, which will drive prices into new all-time high territory soon.
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.