Friday’s ETF Chart To Watch: iShares Russell 3000 (IWV)

by on February 3, 2012 | ETFs Mentioned:

Stocks drifted sideways on Thursday as investors were glad to see a better-than-expected jobless claims report, but held off from jumping into the market ahead of today’s pivotal unemployment data. Confidence in the recovery improved as Ben Bernanke testified before Congers, while the latest jobless claims report showed that 367,000 people filed for unemployment, versus the expected 370,000, and also better than the previous reading of 379,000. On the home front, the Nasdaq led the way higher, gaining 0.40% on the day, while the Dow Jones Industrial Average lagged behind, shedding 0.09%. Gold soared as investors got on the defensive ahead of today’s unemployment number; futures prices for the precious yellow metal settled near $1,760 an ounce [see Five New Features On ETFdb.com].

Investors will turn their attention to the latest unemployment rate data later today as the opening bell on Wall Street rings. In light of this key economic release, our ETF to watch for the day is the ultra-popular iShares Russell 3000 (IWV), which may see an increase in trading volumes as investors react to the most recent information [see IWV Holdings]. Analysts are conservatively predicting for the unemployment rate to come in unchanged at 8.5%, while a big surprise in either direction is sure to ignite volatile trading.

Chart Analysis

IWV has been on a robust trek upwards since bottoming out at $63.05 a share on 10/4/2011; bullish momentum has propelled this ETF higher and is now up more than 6% year-to-date alone [see IWV Returns]. Although this ETF struggled a bit to break above its 200-day moving average (yellow line), relatively heavy trading volume was able to tip it over the hump, affirming that the longer-term uptrend is still very much in-tact. Even more impressive is the fact that IWV has established a rising level of support, further supporting the bullish investment case at hand.

Click to Enlarge

Investors should be cautious when entering at current levels seeing as how IWV has considerable resistance at or slightly above $80 a share; notice how this ETF struggled to summit the $80 level back in March, May, and July of 2011. Furthermore, investors should note that bullish momentum has been cooling off, judging by the fact that trading volumes have steadily decreased since 1/25/2012, while the price has continued to inch higher.

Outlook

If the unemployment report paints an optimistic picture for investors, buying euphoria will surely permeate the markets [see Fund Managers Turn Bullish As "Risk Appetite" Increases]. In terms of upside, this ETF can run up to the $80 mark without a hitch, although short-term traders should consider locking-in gains at these levels, seeing as how this is a historically significant level of resistance. On the other hand, if the unemployment rate brings back the bears, IWV could tumble to $77 a share. Investors who believe that equity markets are overdue for a multi-day pullback should keep their eye on the $75 mark, seeing as how this is an area of major support for this ETF. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.

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Disclosure: No positions at time of writing.