Chart of the Day - Friday, July 19, 2024

🏆 Today’s Chart of the Day was shared by Caleb Franzen (@CalebFranzen).

• Small Caps pared their gains from earlier in the week after breaking out to a two-year high on Monday. The Russell 2000 was up as much as +6%, but it finished the week up +1.67%.

• It has pulled back -3.5% (closing basis) over the past three days, which is mild considering the historic momentum that preceded it. The index surged +11.5% in just five days, and RSI reached its most overbought level since 2017.

• Caleb points out that successfully retesting the breakout level (around 2100) would be healthy. On the other hand, violating 2100 would invalidate this week’s breakout for Small Caps.

The Takeaway: The momentous breakout in Small Caps fizzled out throughout the week, with the Russell 2000 giving back over half of its intraweek gains. This has been a healthy pullback, but violating 2100 would be unhealthy.