Where are Small-Caps Headed?

I was reviewing the Seasonal Chart for Small-Caps ($IWM) and this sector has been lagging the overall market since mid-April. Now bulls, worry not. We do have short-term resistance at $127, and the 20 & 50 day forecast higher. The bulk of the trend evidence remains bullish.

Looking back I also like the fact that there was a string of 52-week highs in February, March, and April. This shows conviction and momentum to the bullish trend. The April pullback was fast and the dip was bought almost immediately.

If you take a look at the MACD on the Seasonal Chart it quickly turned face in May and entered positive territory. Now this explains the Bull stance but the last two weeks action has given pause to the May bounce.

Small-Caps ($IWM) have been stuck in a consolidation and unable to make new highs. Note, this is not a negative since support of $122 has held. But it does warrant pause for anyone buying Small-Caps until new highs are made. I would throw up the bear flag if $IWM cracks $118.

Have a great trading day!