It took nearly 15 months, but the Russell 2000 Index finally broke out to a new 52-week high. On November 25, the Russell 2000 gained an impressive 2.1% to close at its highest level since October 2018.

Small caps have lagged their larger counterparts for much of this year, and the Russell 2000 is still nearly 7% away from new highs, but this development is a major step in the right direction.

“Seeing small caps at 52-week highs is further confirmation to the overall health of this bull market,” explained LPL Financial Senior Market Strategist Ryan Detrick. “We’ve already seen large caps and various countries around the world break out, and now we have participation from a once-lagging group. Participation is the key to any lasting bull market, and this is another great sign as we head into 2020.”

As the LPL Chart of the Day shows, forward returns have historically been impressive when the Russell 2000 goes more than a year without making new 52-week highs. In those instances, the Russell 2000 has risen 10 of 11 times over the next 12 months.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This Research material was prepared by LPL Financial, LLC.

Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (Member FINRA/SIPC).  Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.

If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:

Member FINRA /SIPC
For Public Use – Tracking # 1-921306