Chart of the day

Where do we stand fundamentally?

Investors often look at the Russell 2000 when interested in small-cap stocks or when seeking diversification across U.S. economic sectors not fully represented by large-cap companies.

The Russell 2000 Index has been experiencing notable growth, outpacing some larger indices recently. In October 2024, it gained traction due to increased investor interest in small-cap stocks, benefiting from a favorable economic backdrop that includes resilient economic indicators and recent monetary policy shifts. The Federal Reserve’s rate cut in Q3 helped boost equities broadly, but small-cap stocks, often sensitive to domestic economic changes, saw particularly strong gains. Value stocks in the index also outperformed growth stocks, adding to the positive movement in the Russell 2000.

Specific sectors within the Russell 2000, including real estate and select technology companies, saw impressive gains, while semiconductor-related stocks experienced volatility due to mixed earnings from key players like ASML. This performance highlights the index’s potential as a benchmark for capturing U.S.-focused economic recovery trends

Russell2000 is breaking above the long-term bull flag 2125 and is extending higher in the third short-term wave of the long-term fifth wave for a possible target of 2680. We need confirmation of a breakout above 2210 for an upside continuation in the uptrend fifth Elliott Wave to 2680. Invalidation of this immediate upside extension could come upon a break below 2160.

An invalidation level of a fifth-wave long-term extension higher and a bullish cycle continuation is much lower at 1720 meaning we are in the strong bull uptrend. As said the continuation of an extension could lead to a 2680 target in the medium-term to long-term if the Russell2000 sustains a breakout above 2210 which is being retested.

_{Try a long trade entry with a stop loss below 2200 to target 2500 and higher.}