Small Caps May Have Catch-Up Potential
The Russell 2000 remains well below its record highs from 2021 – unlike other big benchmarks. But some traders may think the small-cap index can play catch-up.
The first pattern on today’s chart is the falling trendline along the peaks of May and June. RUT broke it in mid-July and retested it a few weeks later. Has old resistance become new support?
Second, prices are back above their 50-day simple moving average. The 8-day exponential moving average (EMA) is also above the 21-day EMA. Those patterns may reflect bullish trends in the intermediate and short terms.
Third, MACD has turned positive.
Fourth, RUT bottomed in August at its low from June. The S&P 500 and Nasdaq-100, in contrast, hit levels from May. That may also suggest that relative strength is improving.
Finally you have the long-term comparison with the Nasdaq-100. The RUT/NDX ratio bounced after hitting a record low in early July. It’s now near a 50 percent retracement of that surge. Holding such a location could indicate a change of direction.
Given strength in the broader market and optimism about monetary policy, some investors may think broader conditions favor a recovery in small caps in the later months of 2024.
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Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit https://www.TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
The first pattern on today’s chart is the falling trendline along the peaks of May and June. RUT broke it in mid-July and retested it a few weeks later. Has old resistance become new support?
Second, prices are back above their 50-day simple moving average. The 8-day exponential moving average (EMA) is also above the 21-day EMA. Those patterns may reflect bullish trends in the intermediate and short terms.
Third, MACD has turned positive.
Fourth, RUT bottomed in August at its low from June. The S&P 500 and Nasdaq-100, in contrast, hit levels from May. That may also suggest that relative strength is improving.
Finally you have the long-term comparison with the Nasdaq-100. The RUT/NDX ratio bounced after hitting a record low in early July. It’s now near a 50 percent retracement of that surge. Holding such a location could indicate a change of direction.
Given strength in the broader market and optimism about monetary policy, some investors may think broader conditions favor a recovery in small caps in the later months of 2024.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. See our Overview for more.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit https://www.TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
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