Last week was simply beautiful for small-cap investors as most small-cap stocks burst higher. The Russell 2000 small-cap index rose 6.5% on the week, trouncing all other major indices. The Dow was the laggard, although the 1.3% gain for blue chips was still pretty good. The Standard and Poor 500 rose 2.1% on the week, and the NASDAQ added 2.5%. 

But what a performance by small-cap stocks! The Russell closed the week at 666 after breaking through 660-level resistance around 10:30 Friday morning. The close above this level, and the fact that the index rose throughout the entire day, is certainly bullish. I’ve been saying for weeks that if we see the Russell break through 620 and then 660, I’m targeting a move to 725. I think we might see this in the next few weeks, pending any major economic disruptions on a global scale.  

Take a look at this 5-year chart of the Russell and you’ll see what I mean from a technical perspective. The precipitous drop that occurred in late 2008 when the index fell from 750 to 350 was the result of panic selling as investors became convinced another great depression was unavoidable. Valuations went out the window, and stocks plunged. The index is now approaching the trading range that began in January of 2008, when investors had priced in slowing growth but not a global economic catastrophe.    

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