Sounds like the world’s worst bedtime book for kids, doesn’t it? What I’m referring to, however, is the Russell 2000. See, back in November 2021, as the spasms from the Covid-19 multi-trillion-dollar bailout was hitting its apex (chart below, left circle), the Russell 2000 hit its highest point in history. Three years later, almost to the day (right circle), the $RUT beat its prior record by a tiny, tiny, tiny amount, and the press celebrated that, at long last, the curse was broken, and the “breakout” could user in a sustained bull market.
The fractional new high was the beginning of one of the very few sustained downturns we’ve witnessed in the past two decades.
It just happened again. When the market’s drop reached its nadir on April 7th of this year, small caps had lost a huge chunk of their value, but they began a healing process. Over the space of five months, with increasing regularity and confidence, the Russell 2000 hacked its way higher. Finally, after all that effort, it managed to reach, yes, a new lifetime high by the tiniest, tiniest amount just yesterday.
Thus, over a space of four years, three lifetime highs were reached, with #2 edging out #1 just barely, and #3 edging out #2 just barely.
By no means at all is there any assurance that the Russell suddenly flips and starts heading into a downturn. My only point is that a marginal new high doesn’t suddenly mean all systems are “go”. The rally these days is based on extremely speculative optimism that AI, crypto, and quantum computing are going to be incredible money makers one day, if only folks could be patient with the trillions being poured into them. So far, everyone is a True Believer, and as long as they remain so, the market will keep sliding higher.
For myself, I am entering the day medium-committed (cashed deployed, no margin) and in spite of a wide array of positions, none of them is moving up or down in any way worth noting. It might be a quiet end to a crazy week.
