Introduction
Small caps are back in the spotlight. RTY futures have cleared both the 50-day and 200-day moving averages. While large caps (e.g., NQ/ES) are leading in momentum, RTY is catching up but is still lagging the bigger indices for a while now. Lets see what the technicals are saying.
Technical Snapshot
| Metric | Status / Value |
|---|---|
| Price | 2,218.2 (+0.22%) |
| 50-day MA | 2,082.6 → upward slope |
| 200-day MA | 2,186.4 → flat/slightly rising |
| MACD | Bullish crossover sustained since May |
| Breakout Level | Cleared 200MA + horizontal base at ~2,210 |
| ATH Reference | 2,477.1 (approx. +11.7% away) |
Structure and Trend
- The MACD remains firmly in bullish territory, with the signal line spread widening.
- Price action shows a constructive pattern of higher lows and higher highs since the April bottom.
- Short-term resistance from March (~2,225–2,240) is now being tested.
Rotation Potential
RTY tends to outperform during:
- Early-cycle economic recoveries
- Falling interest rate environments
- USD weakness (which is currently ongoing — see recent DXY analysis)
With large caps extended, a broadening out into small caps would not be surprising. If confirmed, this could provide a sustained tailwind for RTY.
Scenario Probability Table
| Scenario | Probability | Commentary |
|---|---|---|
| Continued upside move to 2,260–2,300 | 50% | Strong MACD & MA cross support this pathway |
| Sideways above 2,186–2,210 | 35% | Consolidation after moving average breakout is healthy |
| Failure back below 2,186 | 15% | Unlikely unless broader market rolls over sharply |
Trade Ideas
| Strategy | Setup Details |
|---|---|
| Breakout long | Entry: Above 2,225 with stop near 2,180; Target: 2,300+ |
| Pullback buy | Buy near 2,190–2,200; stop below 2,170 |
| Relative value | Long RTY / Short NQ pair if large caps begin to lag |
Final Outlook
Short-term: Bullish bias, breakout developing
Medium-term: Neutral-to-bullish rotation candidate
Long-term: Still below ATH, but gaining traction
Key Watchpoints:
- Follow-through above 2,240 will be important for trend confirmation
- Watch macro data for signs of economic breadth improving — key for small caps
- If DXY continues to fall, RTY has further upside via inflation hedging and USD sensitivity
