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Investing.com -- Russell 2000 is attempting to break above 2,350, a resistance level that has capped the small-cap index since early 2021.
Previous attempts in November 2021 and December 2024 failed, but Oppenheimer analysts said the current setup shows improving trading action as long as the index holds above its 200-day average of 2,180.
Though investors should distinguish between participation and leadership, with small-caps continuing to lag on a relative basis.
“We still believe the longer-term trend favors large over small,” the analysts at Oppenheimer said.
Instead, Oppenheimer highlighted mid-cap growth stocks as offering a better balance between leadership potential and rotation.
The mid-cap growth ETF (VOT) reached a record high in July, an indication of relative strength. The firm said mid-cap growth is further along in building a base than small-caps, while being less crowded than large-cap peers.
For the broader market, Oppenheimer pointed to the S&P 500 grinding higher despite seasonal headwinds.
Cyclical sectors have helped offset softer breadth, with 59% of Russell 3000 stocks in an uptrend compared with a 75% cycle high in mid-2024. The brokerage set 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.
Oppenheimer also updated its 50/50 list of small- and mid-cap stocks, balancing 50 buy ideas with 50 sells across sectors.
The list includes relative trend plays in energy, materials, industrials, consumer, technology, healthcare, financials, utilities and real estate.
Overall, the firm said portfolio selection remains more important than market timing, with mid-cap growth standing out as a stronger opportunity than small-caps at current levels.