Russell 2000: Is the lagging small-cap about to charge higher?Russell 2000 is the laggard, while the S&P 500, Nasdaq, and Dow scale new record highs.
Could small caps be next to break out?
While all major US equity indices are hitting new all-time highs, the Russell 2000 is still consolidating just below resistance. This sets up a pivotal moment for traders as the Fed decision looms and Q4 earnings heat up.
Price is holding above the lower trendline of a potential ascending triangle pattern, with buyers defending support and momentum building for a potential breakout above peak resistance.
RSI on a daily basis sits in the mid-50s (neutral), but with room for renewed upside if a breakout occurs. Alternatively, a reset down to oversold could lead to a short-term decline of around 5% to the prior bottom.
But October’s strong earnings and increased bets on Fed rate cuts provide a positive tailwind for small caps this quarter.
Watch for a shift in flows from big tech and mega-caps to small caps if market breadth improves post-Fed.
Keep an eye on the top, as a breakout could open the door to new all-time highs and fresh momentum for the Russell 2000. Don’t miss the rotation potential as Q4 trading picks up.
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