Be Wary of These Lagging Stocks’ Next Move

[Trading With Larry Benedict]( Be Wary of These Lagging Stocks’ Next Move By Larry Benedict, editor, Trading With Larry Benedict When heavyweight stocks rise in a bull market, smaller-cap stocks usually come along for the ride. Yet despite the Nasdaq and S&P 500 making big gains last year, the iShares Russell 2000 ETF (IWM) initially struggled to make any headway at all. (IWM tracks 2,000 small- to mid-cap stocks.) IWM bottomed out in late October. At that point, it was down 7% year-to-date. Yet the broader market surged from November onward. And IWM finally saw its fortunes turn around. In just two months, it gained around 27% (trough to peak). After that sharp reversal, though, it’s drifting lower in 2024. So let’s see what’s coming next… Recommended Link [Elon Musk’s THREE Startups Created an “Army of Millionaires”]( [image]( “Elon Musk’s last three startups were PayPal, SpaceX, and Tesla. Online payments, electric cars, and rockets into space. Just $300 into those startups could’ve turned into $647,000. That’s why the BBC said that Elon helped create “an army of millionaires.” Can Elon create another army of millionaires with his new AI startup? I think so. And remember, AI has already grown 42 times FASTER than the internet. [Here’s a 2-minute video that shows Elon’s AI in action.]( It’s exciting because I trusted my life to the AI as we hurtled at 65 miles per hour.” –Colin Tedards [Click here to see the insane footage.]( -- Tradeable Moves The 50-day Moving Average (MA, blue line) in the chart below shows IWM’s broad sideways trend. Within this pattern, though, the 10-day MA (red line) shows that there have been plenty of tradeable moves: iShares Russell 2000 ETF (IWM) [Image] Source: eSignal You can see a rally and reversal at the start of last year (‘A’). The climb up to IWM’s late July high followed (‘B’). When we [checked in on IWM]( in September (red arrow), though, it was fighting to hold short-term support within the middle of that range. At that time, the Relative Strength Index (RSI) couldn’t gain any traction above resistance (green line). As we noted, if the RSI remained stuck in its lower band, then it would become increasingly difficult for IWM to hold support. A break below support could then set IWM up for another leg lower. And as you can see, that is how things unfolded. IWM fell steadily through late October along with two distinct bearish signals: - The RSI remained stuck in its lower half. - The 10-day MA crossed below the 50-day MA with both MAs then tracking lower. Then IWM’s November rally got going with a huge reversal higher in momentum. Take another look: iShares Russell 2000 ETF (IWM) [Image] Source: eSignal As the chart shows, the RSI ramped up through resistance and into the upper half of its range. The 10-day MA also crossed strongly back above the 50-day MA and accelerated higher. That move petered out and retraced (‘C’), though, off the back of a new pattern. We saw the price and RSI diverge (orange lines) throughout December. The RSI making lower highs from overbought territory (lower orange line) eventually pulled IWM down. And now the RSI recently broke through support (red circle). So what should we look for around here? Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Emerging Downtrend Without sustained buying momentum, it becomes increasingly difficult for a stock to surge. So with the RSI recently falling below support, what happens next will be key. When the RSI remained stuck in its lower band from August to late October, IWM was unable to counter-rally. Instead, it continued to fall. If that RSI pattern repeats here, we can expect IWM’s current down move to accelerate. The chart also shows that the two MAs have closed in on each other since IWM’s peak at ‘C.’ The 10-day MA crossing below the 50-day MA would add further weight to any emerging down move. Regards, Larry Benedict Editor, Trading With Larry Benedict P.S. In a little under a week, I’ll reveal how you can profit from Bitcoin without buying any. And it has nothing to do with the ETFs that the SEC recently approved… My strategy can help you bring in as much as $4,898 in as little as a week… even beating out Bitcoin’s returns over the same time frame in many cases. So whether you’re a Bitcoin true believer… or have yet to touch cryptocurrencies… make sure to tune in on January 24 when I share my special briefing on this strategy at 8 p.m. ET. It’s free to attend. All I ask is that you [RSVP by going right here](. 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