Russell 2000 futures (RTY) has moved to a new all-time high, extending the advance that began from the 30 March 2026 low. The rally into 2,918.4 completed wave (1), before a wave (2) pullback ended at 2,728.3 on the one-hour chart. That correction took the form of a double three Elliott Wave pattern: wave W fell to 2,807.9, then wave X rebounded to 2,881.4, and wave Y declined to 2,728.3, marking the wave (2) low in a higher degree.
After wave (2) completed, price action pushed above the wave (1) high, which is treated as confirmation that wave (3) is under way. The rebound from 2,728.3 is described as a developing five-wave impulse, with wave 1 of (3) nearing completion. A wave 2 retracement is expected to correct the advance from the 19 May 2026 low in either three or seven swings, before the uptrend resumes, while 2,728.32 remains the key pivot level.
Fundamental Backdrop Supports Bullish Breakout
With the Russell 2000 futures breaking to a new all-time high, we see this as the start of a major new bullish cycle. The initial surge to 2918.4 was the first leg up, and the recent dip to 2728.3 was simply a healthy and completed correction. This price action confirms that the path of least resistance is now clearly to the upside for small-cap stocks.
This technical breakout is happening alongside strengthening economic data, giving us more confidence in the move. First-quarter GDP growth for 2026 was a solid 2.2%, and the latest jobs report showed unemployment holding steady at a low 3.7%. These figures point to a resilient domestic economy, which is the primary marketplace for the smaller companies in the Russell 2000 index.
Moreover, the Federal Reserve has signaled a more accommodating policy stance, with market participants now widely expecting an interest rate cut before the end of the year. Lower borrowing costs directly fuel growth and investment for smaller corporations, adding a significant tailwind to the rally. This contrasts with last year, when concerns over rising rates kept a lid on small-cap performance.
Positioning for the Next Bullish Phase
We believe the index has begun its third wave, which is historically the most powerful and extended portion of a bullish trend. We expect a minor pullback in the immediate future as the first small impulse wave finishes. This dip should be treated as a significant buying opportunity, not a reason for concern.
In the coming weeks, our strategy is to use any market weakness to establish bullish positions. We will be looking to buy call options or sell out-of-the-money put spreads as the index pulls back, anticipating a sharp rally to follow. The entire bullish thesis remains intact as long as the price stays above the key pivot level of 2728.3.
This pattern is very similar to the breakout seen in late 2020, which led to a rally of over 40% in just a few months. Historically, when the Russell 2000 breaks out of a long consolidation period with such force, it marks the beginning of a sustained period of outperformance. We are positioning for a repeat of that dynamic.
