IWM is at a multi-year breakout and can go to 273 (20%+) at minimal, and 300+ (40%) in an optimal situation.
- First chart: It is the famous IWM/SPY ratio chart and displays the IWM/SPY ratio on the weekly basis for last 20 years. As we can see, for majority of the time in last 20 years, IWM/SPY ratio bounces between 0.55 and 0.65. However, in last 3 years, IWM/SPY has gone into a steep downfall due to significant rise of SP500 and the bear market of Russel 2000. This 3 year downtrend has been offically reversed in last 2 weeks, and we should expect this ratio to climb from the current 0.41 back to 0.54 level in the coming 6-12 months.
- Second chart: This is the IWM weekly chart. As we can see, IWM has completed the 5 motive waves (bullish) and ABC corrective wave (bearish), and has recently broken through the trading range established in last 2 years. The multi-year weely trend is now clearly upwards
- Final price table in the end displays several scenarios for IWM price target by end of 2024. It uses 0.54 ratio as the final target, and makes different assumptions as to where SP500 could be by end of this year, as a way to derive IWM price. Based on this analysis, IWM's minimal price target would be 273, repsenting another 20% price increase.
Recommendation: Buy IWM aggressively at any pull back
