China leading emerging market ETFs to 52-week highs and new record levels for U.S. small-cap stocks are among the encouraging signals for the market and investors as 2013 kicks off in style.
The record high this week in the Russell 2000, an index of U.S. small-cap stocks, is a “positive sign” for the market along with the upside breakout in the transportation sector that lagged in 2011, says John Murphy, chief technical analyst at StockCharts. The iShares Russell 2000 (NYSEArca: IWM) is a popular ETF for the market’s smaller companies.
“From a seasonal perspective, this is a good window for small caps,” Kimble Charting Solutions said in a note Wednesday. “With them back at 2007 highs, we have to watch them closely … if they break the old highs, money flows should chase them.”
Another constructive sign for the markets is iShares FTSE China 25 Index Fund (NYSEArca: FXI) hitting a fresh one-year high and showing “new global leadership,” says Murphy at StockCharts.
“That’s also good for commodity markets and copper in particular,” he added.