• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / ETFs

This Small-Cap Proxy Looks Ready to Break Out, So Here Are 2 Ways to Play It

In case you hadn't noticed, the most popular small-cap ETF around seems to be regaining its footing and could put on a sprint soon.
By BOB BYRNE May 23, 2023 | 07:45 AM EDT
Stocks quotes in this article: IWM

You can take your debt ceiling worries and shove them.

That seems to be the message from the bulls. Politicians continue to fail to make headway toward a debt ceiling resolution. The week started in the same way it ended -- lots of posturing with very little progress.

Yet while deadhead politicians flounder and Fed heads keep talking about inflation and the potential need for higher rates down the line, small-cap and tech buyers were still pounding the buy button.

Chances are you're long tech by now, if anything. If not, then it may be too late to chase, but fortunately, there is another choice: small-caps.

It's hard to ignore the iShares Russell 2000 Index ETF (IWM) at this point. The small-cap proxy appears ready to break out higher and push for the $185 level. On Monday, the 10-day exponential moving average (EMA) broke above the 21-day EMA. The 5-day EMA has been trending up for a week now as well.

Traders could approach this ETF one of two ways regarding a trailing stop. First, conservative traders could use a close, or consecutive closes, below the 21-day EMA as a stop loss. That only provides a few percentage points leeway to the downside, but it would guard against a big drawdown in a hurry if the market reverses.

Unfortunately, using that approach may shake a trader out of the position too quickly. It's a tight stop. We could break that level with some minimal profit-taking. We could touch $175, then quickly reverse higher.

My preference would be to assume a smaller position and use the $172 low area from the past 12 trading sessions as a signal to exit. Each day the IWM moved higher above $179, I'd inch that stop higher by at least half the increase from the day.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Byrne had no positions in the stocks mentioned.

TAGS: ETFs | Index Funds | Investing | Small Cap | Real Money

More from ETFs

3 Small Biotech Stocks That Could Be Stars

Bret Jensen
Sep 29, 2023 10:00 AM EDT

Not all the news from the small biotech space is bad. One company in particular already has been gaining the attention of investors.

Anxiety Creeps Back Into the Markets, but I Think Outright Panic Could Lie Ahead

Bret Jensen
Sep 27, 2023 11:00 AM EDT

Volatility is picking up, but I believe it could become much more intense in the first half of next year.

'Higher for Longer' Puts More Pressure on Homebuilders… and Homebuilder Stocks

Bob Byrne
Sep 27, 2023 9:00 AM EDT

If I've got money in the homebuilders, I'm looking to sell a bounce, not buy one.

Downside Concern Shifts From One Major Index ETF to Another

Bob Byrne
Sep 26, 2023 7:46 AM EDT

As the iShares Russell 2000 ETF almost returns to where it started the year, our attention turns to the Invesco QQQ Trust.

Brace Yourself as Higher Rates Start to Take Their Toll

Bret Jensen
Sep 25, 2023 11:00 AM EDT

Homebuilders and owners of commercial real estate in particular are feeling the rate-induced pain, and it likely will intensify in the months ahead.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 12:13 PM EDT BRUCE KAMICH

    8 Trading Rules from T. T. Hoyne

    You just read the header for this missive and prob...
  • 08:42 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How Elite Traders Make Big Profits
  • 02:58 PM EDT BRUCE KAMICH

    Classic Trading Rules From Bernard Baruch

    Bernard Baruch listed the rules (below) in his aut...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login