The Russell 2000 is once again attempting to break above the 2,350 resistance level, a barrier that has capped small-cap performance since early 2021.
Past attempts in November 2021 and December 2024 failed, but analysts at Oppenheimer noted that the current setup looks more constructive as long as the index holds above its 200-day moving average of 2,180. Still, they cautioned that investors should distinguish between participation and leadership, as small-caps continue to lag on a relative basis.
“We continue to believe the longer-term trend favors large over small,” Oppenheimer analysts said, while pointing to mid-cap growth stocks as offering stronger leadership potential.
The mid-cap growth ETF (VOT) hit a record high in July, reflecting relative strength. Oppenheimer argued that mid-cap growth is further along in building a sustainable base than small-caps, while also being less crowded than large-cap peers.
For the broader market, the S&P 500 continues to grind higher despite seasonal headwinds. Cyclical sectors have provided support, with 59% of Russell 3000 stocks currently in an uptrend, down from a 75% peak in mid-2024. Oppenheimer identified near-term support for the S&P 500 at 6,427, followed by 6,260 at the 50-day average and 6,030 at the June 24 gap.
The brokerage also refreshed its 50/50 stock list, balancing 50 small- and mid-cap buy ideas against 50 sells across energy, materials, industrials, consumer, technology, healthcare, financials, utilities, and real estate.
Overall, Oppenheimer emphasized that portfolio selection is more important than market timing, with mid-cap growth offering a more compelling opportunity than small-caps at current levels.
