Quite the Straight-Line Path

A wide spread between the glaring weakness in the IWM, ETF for the small cap stocks housed in the Russell 2000 Index, versus a large cap tech "FANG" name like NFLX today (currently up by more than 1%) is just one feature of a market likely correcting a one-way rally since Christmas. Recall that during the post-Christmas rally we saw the FANG gang mostly underperform. So, seeing FB and NFLX green here should not be too surprising as bulls attempt to stave off a truly ugly tape via rotation. 

In addition, long-time laggards like BlackBerry (BB) are perking up and perhaps may be flashing sign of turning the corner, albeit with plenty more evidence needed to confirm that working thesis. 

But returning to the small caps, this is certainly a concerning part of the market we need to monitor closely as we head towards a big jobs number on Friday morning. The main reasons why the jobs number matters so much is that it could portend the Fed becoming rather hawkish again if the dater is super strong. Otherwise, bears may be put to the test into the weekend. 

Until then, it is worth pointing out that the IWM has a notable open gap, below spot price. On the IWM hourly chart, we can see as much with the horizontal light blue line I have drawn. 

The gap fills down to $151.15, and today's straight-line path lower has made that gap-fill all the more of a distinct possibility due to how much ground bears covered in today's session. 

Thus, as much as I want to go after healthcare names which have been pulling in after big rallies, like GH THOR etc., I am going to show extra patience and see whether the IWM does want to fill that gap below before splashing around too much on the long side again.