Contextualizing Todays Move in the Russell

$IWM

An exciting afternoon after the Powell speech did not disappoint, or rather, did.

Todays -4.43% move in the IWM 0.00%↑ is just the 14th move of such magnitude since the start of 2020. Looking at the other 13 occasions, here’s what we know - On average, the index was up 8.4% 30 days later. The index was lower 30 days later on only 4 of the prior 13 occasions, and the average loss was approximately 7%.

Here’s what separates todays occurrence from the prior instances where the index tracked negative over the forthcoming 30 day period -

The arrows above show that those occurrences took place with the Russell below its 200 day moving average. We also know that the sell-offs in 2020 and 2022 occurred in close proximity.

The IWM 0.00%↑ is about 3% above its 200 day moving average after today’s move. There are two days left in the week, in what is a seasonally strong period. If IWM 0.00%↑ finds support at the 200 day heading into the weekend, it would be an extremely positive development heading into the end of the year. And if it doesn’t, it will warrant consideration to the likelihood that that market may be in a risk off mode as we enter Q1.