Further supporting the small-cap outlook, the U.S. economy is still showing signs of growth with U.S. retail sales and consumer spending trends on the rise while the rest of the world is revealing weaker economic data.
“In fact, when this indicator signaled last Friday, the IWM was just 6.3% off its three-month high. Of the 27 total signals back to 2000, that’s the smallest pullback that generated a signal. When these signals occurred after pullbacks of less than 10%, the IWM performed even better going forward,” reports Schaeffer’s.
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Tom Lydon’s clients own shares of IWM.