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Another small reversal

Jason Goepfert
2020-12-28

There have been some notable reversals from the opening print, especially in the dollar, gold, and small-cap stocks. For the Russell 2000 fund, IWM, it gapped up more than 1% at the open and is on track to close below the opening price as buyers haven't been interested in chasing. As we saw before, though, these haven't been all that reliable as reversal signals.

The last two times this triggered, IWM turned around immediately and hit new highs. Probably the most worrying aspect of this is simply that it keeps happening. This is the 3rd time in 3 weeks that IWM has gapped up at least 0.5%, hit a new high, then couldn't hold its opening price. The only other time it had a cluster like this was in January 2004.

Each time it had even 2 reversals in a 3-week period, it couldn't hold its gains going forward. Tiny sample size, though.

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