Small Caps Join the Party

Market Blog
November 26, 2019

It took nearly 15 months, but the Russell 2000 Index finally broke out to a new 52-week high. On November 25, the Russell 2000 gained an impressive 2.1% to close at its highest level since October 2018.

Small caps have lagged their larger counterparts for much of this year, and the Russell 2000 is still nearly 7% away from new highs, but this development is a major step in the right direction.

“Seeing small caps at 52-week highs is further confirmation to the overall health of this bull market,” explained LPL Financial Senior Market Strategist Ryan Detrick. “We’ve already seen large caps and various countries around the world break out, and now we have participation from a once-lagging group. Participation is the key to any lasting bull market, and this is another great sign as we head into 2020.”

As the LPL Chart of the Day shows, forward returns have historically been impressive when the Russell 2000 goes more than a year without making new 52-week highs. In those instances, the Russell 2000 has risen 10 of 11 times over the next 12 months.

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This Research material was prepared by LPL Financial, LLC.

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