IWM Symmetrical Triangle Hi all, this morning I want to make a post on IWM, one of my personal core holdings. For those who do not already know, IWM tracks the Russell 2000, which is a collection of the top 2000 small-cap US equities.
Fundamentally, we are beginning to see default rates jump within smaller companies and poorly equipped balance sheets not being able to handle the pressure. Looking at the sector weightings, I see 16% tech, 16% healthcare, and 15% industrials. These industries rely on debt for a large majority of their growth. Lots of small-cap companies rely on floating-rate debt (interest payments rise with higher rates) due to creditors wanting higher yields for taking on the perceived risk. Also, lots of these 'cheap money notes' are beginning to mature and will continue into 2025. When these companies need to acquire new debt, creditors will either A. require much higher yields than before or B. not provide any debt whatsoever.
Yields are a huge driver for growth.
Technically, I'm seeing a symmetrical triangle pointing to the downside. As we've completed a 5-wave move, we could see a sharp downturn for IWM.
