Are Small Caps Taking Leadership Again?
The Russell 2000 led markets to the downside in recent months. Now it may be leading the rebound.
Notice how RUT made new February highs yesterday and today, while the S&P 500 and
Nasdaq-100 are below their highs last week.
Next, consider the price zone around 2,000. This is not only a “nice round number.” It’s also a level RUT broke on high volume early last year. (You can use IWM’s chart for the volume.)
Third, RUT is back above both its 8- and 21-day exponential moving averages.
Fourth, consider this long-term chart showing the ratio between small caps and the Nasdaq-100. It shows RUT near its lowest relative valuation since the tech bubble started deflating in mid-2000:
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TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all 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. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. 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, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
Notice how RUT made new February highs yesterday and today, while the S&P 500 and
Nasdaq-100 are below their highs last week.Next, consider the price zone around 2,000. This is not only a “nice round number.” It’s also a level RUT broke on high volume early last year. (You can use IWM’s chart for the volume.)
Third, RUT is back above both its 8- and 21-day exponential moving averages.
Fourth, consider this long-term chart showing the ratio between small caps and the Nasdaq-100. It shows RUT near its lowest relative valuation since the tech bubble started deflating in mid-2000:
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all 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. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. 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, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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