Russell reversal

After a tough day yesterday, small-caps are among the leaders on Tuesday. The Russell 2000 is on track to completely reverse Monday's losses, which pushed the index to nearly a 1.5% loss and to a 10-day low.

There have been surprisingly few instances of the index reversing such a big loss the next day, and so close to a 52-week high. Only one of them ended up leading to sustained, if minor, gains.

If we look at signals within 10% of a high, then we more than double the still-small sample size. Returns were still curiously weak, though, especially over the next 3 months, with only 3 winners out of the 12 precedents but the latest one from November will surely show a gain as well. As we see so often, what looks obvious on a chart doesn't necessarily hold up under scrutiny.