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In the new world trading order, the name of the game is rotation.
Three weeks ago the PitBull mentioned buying the “beaten down Russell 2000” and not long after it had its best trading day in a year, rallying more than 5.4%.
The index surged as the risk-on rally extended to small caps and was up another 1.25% on Friday when most of the other indexes were struggling.
40% of the Companies in the Russell 2000 Report Negative Earning, Can You Say Rotation?
The index made a high in late July, then suffered a decline of almost 19%, making its low on October 27th. Since that low, the Russell is up 10% and at last week’s high, was up 12%.
If you are not familiar with rotations, here is a link to read about it.
To conclude, the jump in the Russell is a big example of a year-end rotation — buying the beaten-down stocks and lightening up on the ES and NQ rally.