Art's Charts

March Turns Rough for Small and Mid Caps

Arthur Hill

Arthur Hill

Chief Technical Strategist, TrendInvestorPro.com

The Russell 2000 iShares (IWM) is not only lagging the S&P 500 SPDR (SPY) and the Nasdaq 100 ETF (QQQ) in March, but it is also under selling pressure and down month-to-date. Typically, I am not concerned with relative weakness in small-caps when they are simple up less than large-caps. However, we are seeing absolute weakness in small and mid caps, and a large performance discrepancy the last three weeks. IWM is down around 2% and the S&P SmallCap iShares (IJR) is down over 3% this month. In comparison, SPY is up around 1.5% and QQQ is up a whopping 4%. For those keeping score at home, the S&P MidCap SPDR (MDY) down around 1.33%.

In general, I am not a big fan of shorting stocks or playing the downside. The stock market has a long-term bullish bias and the bulk of the evidence for the S&P 500 remains bullish. Having said/written that, I am seeing a bearish setup in IWM. The ETF broke down with a sharp decline in early March, returned to broke support with a 61.8% retracement and reversed lower the last two days. This signals a continuation of the early March decline with a first target in the 147 are (38% retracement)

I am going to add the Proshares Short Russell 2000 ETF (RWM) to the Art's Charts ChartList with a re-evaluation on close below 40. (IWM close above 155.5).


On Trend on StockCharts TV

Thursday 21-March at 10:30 and 11 AM ET

  • Three Big Sectors Weaken in March
  • Housing, Retail and Banks Turn Down
  • A Bearish Setup for IWM (comparing RWM)
  • Bond Market Leads the Fed
  • Dynamic Yield Curve
  • Click here to watch

- Arthur Hill, CMT

Senior Technical Analyst, StockCharts.com

Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill


Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More