Chart of the Day - Monday, December 7th, 2020

Today’s Chart of the Day was shared on Twitter by Yuriy Matso (@yuriymatso). It's a monthly candlestick chart of the Russell 2000 over the past two decades. The night before the US Presidential Election, Yuriy made a timely observation that the Russell 2000 has a history of breaking out after US Elections. Well, it sure looks like history is trying to repeat itself as the Russell 2000 has surged to record highs in the past month. According to Yuriy, the prior two post-election rallies (2012 & 2016) both lasted about two-years and ran about 45% and 35%, respectively. The Russell is currently trading just under 1900 and a similar size rally would bring it up to ~2300-2400. Small-caps have been dead money for the past few years. Now that they've finally broken out, it's not all that crazy to think we could see a similar scenario play out over the next 1-2 years.