Enjoy the Ride

The price swings we are seeing in the IWM, ETF for the small cap-dominated Russell 2000 Index, seem improbable compared to the silky-smooth daily charts for the QQQ and SPY. And, yet, the roller coaster is a reality of the current market for small caps, with day-to-day (and oftentimes intraday) indecision reigning supreme. 

In times like these, we must zoom out and appreciate the forest for the trees, especially given the overall strength in tech and indeed the market at-large. And even with this morning's ugly start to the day for bulls, with IWM down more than 1.3% at one point, buyers have fought valiantly for a respectable session as we head into the final hour of trading. 

On the updated IWM daily chart, below, we should respect the fact that bears have been unable to, thus far, bring the small caps back below its 200-day moving average despite the volatility. True, AMZN earnings tonight and the GDP print tomorrow morning could yield unpleasant surprises. But the roller coaster so far has proved inept at rolling the small caps back over to a meaningful degree. 

Moreover, the 50-day moving average (arrows, dark blue line) continues to serve as an area of strong support. Until that changes, we should enjoy the roller coaster ride because, well, we have no other choice. But the damage is not material until bears sustain their selling below it.