IWM-The Market is posied for a smaller correction until Oct.

IWM

Fundamental factors

Summer is traditionally known as a slow period for the markets in general.  

Usually there is a smaller rally in July followed by a selloff in late august and Sept as everyone knows historically has been very bearish. 

Looking at the 2 charts below you can see in the first which is the de-trended seasonality for IWM shows that mid august to mid Sept there has been a rally. September then there has been a sharp selloff. And then the market pivots and starts the bull rally again.

Taking the election cycle into account as well you can see that we are entering a cooling off period that historically has lasted until mid December.

Technical factors

Technically looking a the IWM chart you can see that we are testing the trend-line right now. A break below that and I would be looking for a retest of the 186.50 support and then the 180-183 demand zone. Its already tested that resistance area from the previous 2 highs and failed the test both times. Taking the other factors into account i don't think we'll see a 3rd retest until at least October

Other Factors

If you further take into account that the last CPI number released on August 10  was higher than expected. major catalyst for this selloff the last 2 weeks could come in even higher in September. This could easily add the the already bearish bias. The FED might still raise rates likely in late 2023 or early 2024 if this trend continues.