Over the past few months, I have maintained a calm and confident attitude in a clearly bullish context, convinced that it was unlikely to see a lasting correction on Wall Street without the Russell 2000, which brings together American small and mid-caps , does not previously reach at least the maximum zone of 2021. This conviction is what allowed me to recommend without hesitation the purchase at times when global indices corrected by around 10% compared to its previous highs, as happened in August.
This week’s technical analysis highlight was seeing how the Russell 2000 Index finally reached these 2021 highs. This upbeat behavior from “second tier” stocks is a positive sign for the overall market.
Historically, investors bet on these small stocks when they are confident in the direction of the stock market, because, in bullish environments, they tend to offer greater growth opportunities than large-cap giants. But in times of uncertainty, they are often the first to suffer.
At this point it is time, as I often say, take out the camera. The Russell 2000 is attacking a critical level, that of the highs of 2021. To achieve a “poker of aces”, in which all American indices show strength, we need the Russell 2000. exceed this ceiling decisively, ideally during a monthly closing. If this happens, it would be a very positive sign for 2025, reinforcing the strategy of taking advantage of 10% corrections in indices as buying opportunities.
While I’m waiting to do this photo of Russell, I will continue with the planned operational plan. The fact that the Russell is hitting 2021 highs leads me to recommend taking partial profits and slightly reducing exposure to the stock market. A prudent strategy might be, for example, reduce exposure by 25 points for 100 thousand euros invested.
If the market continues to rise, the remaining 75 thousand euros will allow you to benefit from the upward trend. On the other hand, if the market chooses to consolidate, as we have seen in Europe, this liquidity will be a ammunition Valuable for future purchases.
