After bouncing off the 200 day Simple Moving Average twice in April, the Russell 2000 ETF (IWM) has finally broken through its support. The ETF has bounced slightly off its 200 day Exponential Moving Average but IWM still seems to be looking for direction. There looks to be some support at the$109.32 price. That is not far from the 2014 low of $107.27 but it is far from IWM's 52 week low of $93.83. If it breaks through the $107.27 level then small cap stocks could get hurt in a hurry. A moving average is an indicator that shows the average value of a security's price over a specific period of time. The averages are used to smooth out the volatility in the price sequence, to make it easier to discover an underlying trend. To further break it down, a simple moving average is one where equal weight is given to each price over the specific period as opposed to the weighted or exponential averages (more weight is given to the latest data). Many market professionals feel the Russell 2000, which is the small-cap index, tends to move early leading the broader market (S&P 500). They feel they can get an early indication of when the market will change direction by watching the Russell 2000.