artisanwill
Equity & Options Trader, Analyst at The Option Cartel, MS Finance
US small caps are now one of the strongest indexes, trending up almost steadily since April's low with shallower pullbacks than the Nasdaq, and the rotation into small-cap value is not over. The trend stays bullish while the index holds its 21-day EMA and the 296 gap, with gamma-structure targets at 305 and then 310-315. x.comÂ
US small caps' first pullback since their historic, volume-supported breakout this year is a huge opportunity, because institutions are selling nothing and are actively accumulating around the $294 level. Weekly and daily charts show textbook accumulation on every failed new high, so the big picture holds even as short-term upside stalls. x.comÂ
Favoring the Nasdaq 100 over small caps remains right because the digital economy has changed market structure, and AI is accelerating that shift. Fading QQQ against IWM has been the widowmaker trade in US equities since the iPhone launch. The Magnificent 7 are breaking out to new all-time highs as AI enters a consumer-agent stage, while small caps suffer from fears over rates and oil. Breadth warnings are everywhere, but the structure has changed: adapt or die. x.comÂ
Small caps, utilities and regional banks look set for an oversold catch-up rebound as market breadth improves in early October. The broad market should make new highs led by semiconductors and big tech, with small caps and sectors previously held down by rates catching up. x.com x.comÂ
Banks and XLF look to have bottomed this past week, supporting a local bottom in US small caps. Stockspy1 noted that the Russell 2000 includes many regional banks, linking the banking-sector turn to IWM. x.comÂ
US small caps are being used as a source of funds rather than trading as a rate-sensitive proxy, which leaves them vulnerable. Money is rotating out of the S&P 500 into equal-weight and NYSE names and from AI into defensives, while the Nasdaq 100 was hammered and is now bouncing. Rising yields are the bigger threat to AI bulls, yet Warsh is a dove in hawk's clothing. x.comÂ
US equities want to go higher off extreme pessimism. The wall of worry reached DEFCON 1 levels over the past several weeks and the Fear & Greed Index dipped into Extreme Fear, leaving opportunity across beaten-down growth stocks and crypto. If the Iran conflict de-escalates at any point, this is about as strong a setup as any since late March. x.comÂ
US small-cap stocks look strongly bullish. x.comÂ
US small caps look overextended: the Russell 2000 is only 3% off its highs and is full of weak companies that were spared the selloff because they aren't in the Nasdaq 100. Single stocks are whipping around while the S&P 500 stays muted, and the S&P could be 15% lower without anyone thinking it unwarranted. x.comÂ
Russell 2000 small caps look set to rise near term, based on heavy options betting on IWM to go up. x.comÂ