This week, it is crucial for traders to maintain the overall macro firmly in their vision.

We are keeping an eye on the indices, currency movements, the PCE print, and the GDP statistics. We also closely follow the small caps this week, the Russell 2000 (IWM), and the patriarch of Mish's contemporary economic clan. Grandpa has been sending out encouraging technical signs, and IWM could continue advancing in the coming weeks.

In the daily chart today, IWM pushed through the critical 50-day moving average. This index has been a great leading indicator of late, and we see no reason why that trend will not continue. We know that "Gramps" has some work to prove that the rally over the last two weeks is not just another FOMO-based bear market bounce. Let's take a closer look to decipher what might happen next.

The Granddaddy Russell held necessary support in mid-October and was the only index that held its mid-June lows. Grandpa has since rallied, leading the indices, followed by DIA at a distant second. IWM offers focused exposure to the American small-cap market.

Small-cap stocks have made a strong recovery over the past month. The SPY ETF is up 3.7% over the last month, while IWM ETF is up 6.9%.

Today, Grandpa took out the 50-day moving average, the six-month calendar range high, and is displaying substantial upward momentum strength in the Real Motion Indicator. Grandpa is now closing in on the 187-price tag and the 200-day moving average. Of course, the Murphy's Law side of this trade is that IWM does not confirm this move over the 50-DMA or the 200-WMA as the week continues. Then, with poor earnings from mega cap stocks, it is equally possible that Gramps runs out of steam and reverses to the downside.

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