Chart of the Day - Friday, December 17th, 2021

Today’s Chart of the Day was shared by Jay Ligon (@TheeDisruptor). It's a chart of the Micro-Cap ETF, $IWC, and the Russell 2000 ETF, $IWM, over the past five months. Jay points out that Micro-Caps and Small-Caps have both formed bullish momentum divergences. For the uninitiated, a bullish momentum divergence is when price makes a new low, while RSI makes a higher low. In both cases, RSI never reached oversold (below 30) when price made a new low, which is even more encouraging. Small-Caps and Micro-Caps have undergone sharp corrections recently, with max drawdowns of 15% and 12%, respectively. It's been a rough month for the little guys, but seeing momentum diverge like this is a sign that the bears are running out of steam.