Is it time for small-cap stocks to shine?

  • Small-cap stocks are close to breaking out
  • The Russell 2000 index has underperformed the S&P 500
  • Charts suggest an upcoming advance for small-cap stocks
  • Relative strength of the Russell 2000 is weaker than its price action
  • Breadth is weaker than the price action, indicating a high-risk trade

The small-cap Russell 2000 index has been stagnant since January 2021, underperforming the S&P 500. However, charts suggest that small-cap stocks are getting closer to beginning an advance. The rally off the October low was quick, and holding above 1850 on pullbacks would be encouraging. The relative strength of the Russell 2000 is weaker than its price action, but with positive momentum divergence, it may rally 10% versus the S&P 500. However, breadth is much weaker than the price action, with the advance/decline line far below its January high. If the Russell 2000 closes above 2060, it would generate upside projections to 2300, signaling a buy opportunity. However, without meaningful improvement in breadth, this would be a high-risk trade.

Public Companies: iShares Russell 2000 (N/A)
Private Companies:
Key People: Andrew Addison (Author of The Institutional View)

Factuality Level: 7
Justification: The article provides analysis and opinions on the performance of the Russell 2000 index and small-cap stocks. While the author presents charts and technical analysis, the information is subjective and based on the author’s interpretation. The article does not provide concrete evidence or data to support the claims made. Therefore, the factuality level is rated at 7.

Noise Level: 4
Justification: The article provides some analysis of the Russell 2000 index and its relative strength, but it lacks in-depth analysis and supporting evidence. It also includes some irrelevant information about the Charging Bull Statue in New York and a text-to-speech technology feature.

Financial Relevance: Yes
Financial Markets Impacted: Small-cap stocks, Russell 2000 index, S&P 500 index

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the performance and potential future outlook of small-cap stocks, specifically the Russell 2000 index. While there is no mention of any extreme events or their impact, the information provided is relevant to financial markets and investors.

Reported publicly: www.marketwatch.com