Two risky areas of the market, Small Caps and Micro Caps, have followed the same multi-year basing pattern breakout, retest, and expansion attempt.
Here’s the chart:
Let's break down what the chart shows:
Small Caps (IWM) is shown in the top panel as a blue line.
Micro Caps (IWC) is shown in the bottom panel as a black line.
The Takeaway: Small caps are back at 265 and pressing into the same highs that capped the move in January. Micro caps are doing the same thing near 172. Both groups broke out in late 2025, pulled back in March, and held those breakout levels.
Small caps and micro caps are moving together here. This is where risk shows up when the market is pushing higher. You don’t see these type of moves in a defensive market.
Small caps pulled back into 240 and held. Micro caps did the same at 158. That’s where the breakout happened. Price came right back to those levels, and the bulls held it. If this move was weak, that’s where it breaks… but it didn’t.
The line in the sand is now very clear.
Hold those breakout levels, and the trend has a tailwind to continue moving higher.
This is just another check in the risk-on column. Risk-on signals have been building all week, and with strength now in small and micro caps, that adds to it.
My system just printed a perfect score in small-cap tech. That’s where I’m focused.
Got any small-cap tech names I should be looking at? Send them over.
