Will Small Caps Follow the S&P Higher?The Russell 2000 small cap index has lagged all year, but it may be showing some signs of coming to life.
The first pattern on today’s chart is the rally in early June, a potential sign of the bulls taking charge.
RUT proceeded to retrace half the move before rebounding. That could mean the bulls are staying in charge.
Third, the bounce occurred around 1820. That price area (marked in white) served as support and resistance a few different times this year.
Next, 100-day simple moving average (SMA) crossed above the 200-day SMA in mid-May. The 50-day simple moving average (SMA) is also nearing a potential “golden cross” above the 200-day SMA.
Those patterns not only suggest long-term trends are growing more favorable. They also resemble similar developments in the Nasdaq-100 and S&P 500 before those indexes rallied to new 52-week highs.
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