IWM and the January effect

While the rising flag (pink) and support break at 58 were bearish for IWM, we must always be prepared for the unexpected when dealing with the stock market. What would be the precursor if IWM were to move above 62 by yearend? First, we must not forget the January effect, which starts in mid December. As the Stock Trader's Almanac notes, small-caps outperform the broader market from mid December to mid -January. Second, perhaps the big support zone around 55 will ultimately hold. Third, IWM is firming around 57-58 with an inverted hammer and hammer over the last two days. Should a higher low form at 57, a triangle could be drawn with resistance at 60. A break above 60 would target further strength above the prior highs. Even though small-caps show relative weakness the last few months and Friday's gap is holding, the bears need to be careful in here.