Russell 2000 threatens a breakout
One of the best charts out there right now is the Russell 2000 index of US small(er) caps. It’s been consolidating for nearly a year now in a narrow range.
That’s after it made a big move up after the pandemic and then another leg higher on the reflation trade. That there was no significant pullback from the high is bullish and I suspect most people assume it’s only a matter of time until it breaks.
That time might be now. It briefly ticked to a new 2021 high today before giving some back. Here’s the ETF chart because it’s a pain to get the cash version and they look the same anyway.
The caveat though is some compositional issues. The two largest components of the index are now CAR and AMC. If you haven’t seen what’s happening in CAR today — it’s Avis car rental — then have a look. It’s meme mania and that’s the kind of thing to keep in mind if you’re looking for a reason not to believe in the breakout.
That said, all the main US indexes and the MSCI world index all hit new highs today and continue to trade strongly. The S&P 500 was last up 19 points to 4624.
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