Small Caps: Finally a Breakout?The Russell 2000 has been stuck in a rut for years, but some traders may think the small-cap index has finally achieved escape velocity.
The first pattern on today’s chart is the November 2021 high around 2,460, where prices stalled last November. RUT has gotten above it this month and refused to stay below. Is a breakout finally underway?
Second is the September 25 low of 2,394. Prices tested and held that level last week, which may confirm support is in place.
Third, the index had a bullish inside candle after Friday’s selloff, followed by a bullish outside bar. That may reflect buyers are gaining control.
Next, RUT has apparently broken a trendline that began with the high on October 6.
Finally, consider this weekly ratio chart of the Russell 2000 against the Nasdaq-100. Notice how RUT outperformed in late 2023 and July 2024. Both of those moments saw expectations of Federal Reserve rate cuts. (Such moves often favor small caps.) Notice how the ratio is climbing again at the same time that investors look for more dovishness from the central bank.
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