The IWM (iShares Russell 2000 Index Fund ETF) is showing signs of being overbought as it challenges the June highs. This level is significant long term support/resistance as shown here. A negative divergence has developed in the MACD histogram as the MACD itself is approaching levels that have marked previous tops.
A pause in the rally here is likely. We are looking at downside support in the area of 68-72. Maintaining the trend in relative strength is crucial to any further rallies.
We are also rapidly approaching the September – October washout period that has historically provided excellent entry opportunities. Small caps maintaining relative strength and holding support throughout this typically volatile period would be a major positive for the market as a whole.