IWM and the Russell 2000, where's the bottom?Here's my take on IWM, the ETF that tracks the Russell2000. As you can see, I ultimately see IWM falling all the way to around $165. That's about 16% below where we are now and 12% below our lowest point of last week. I believe the market tailwinds produced by the earnings of market powerhouses Google, Apple, Microsoft, and Amazon will quickly subside and the headwinds of inflation will replace them.
My target is very near the 50% retracement point of the height of the last wave from the Covid crash bottom of about $95 to the all time high of $245. The 50% retracement point is the most common, but it can range anywhere from 33% to 66%, generally. You can also see that my target seeks to close the 8.15% gap that was created the weekend Biden was declared the winner of the 2020 Presidential election by all the major news outlets. I am not someone that normally puts as much stock into "gap filling" as others seem to do, but this is an exceptionally large gap where lots of money piled into the market. 8.15%! In hindsight, this was a powerful gap signifying that the bull trend was about to kick into high gear. IWM proceeded to go up 35% in the next 3 months. Seems so long ago!
I find it interesting that the gap coincided perfectly with the All Time High that was hit just prior to the covid crash in Feb/Mar 2020. Coincidence? Hmmm.....
