Tom’s Weekly Newsletter: April 21st, 2021

Here are a couple of charts on parts of the market that are important to keep an eye on even if they aren’t highlighted that often in the weekly newsletter.

iShares Transportation Average ETF (IYT) — Transports iShares Russell 2000 ETF (IWM) — Small Caps

A gauge on the strength and sustainability of the economy and the markets is the transports. Stocks in this sector can be used as a tell on how well rallies can be sustained in that it shows consumers are buying goods and these goods need to be shipped / delivered.

Year to date 2021 on IYT

Copyright 2021, Tom Gentile, Tom’s Trading Room, LLC – All rights reserved.

Next to highlight is the small caps. The index that is comprised by those stocks classified as a small cap stock is the IWM.

The assessment by many is small caps tend to lead the markets.

The Dow, S&P 500 and NASDAQ are at or near all time highs even after selling off the past couple of days, but the IWM (small caps) is not.

It did, however, rally 2.4% higher today.

Year to date 2021 on IYT
The IWM is often considered a leading indicator both higher and lower.

If the IWM sells off and breaks yearly support the bigger markets may follow and start to trail further off.

The other possibility is the IWM follows through on today’s nice surge and the bigger markets rally continues.

Tom Gentile
C1P Chief 1-Percenter