Small Caps Are Flashing a Dangerous Warning Sign

Hey everybody, Tom here.

Lately, I’ve been talking about how September is one of the hardest months to trade…

And my friend and long-time colleague, Chris Johnson, has been banging the same drum. As a data person, we can both point to several reasons why September historically yields poor performance. Chris just spotted an ominous signal in one of the major indexes, and I want to share his research with you.

I’ll let him take it from here. More from me tomorrow.


And just like that, seasonality gets to work.

I always say, “one day is a point, two days is a line, and three days or more is a trend,” so take this with a grain of salt, but the Russell 2000 index just made a move that the bulls should be watching.

You see, the small-cap universe of stocks are often the leaders.

In both bull and bear markets, the small caps historically lead the way.

The reason is simple and comes down to one word — risk.

Sure, we like to watch stocks like NVIDIA (NVDA), Amazon (AMZN), and Alphabet (GOOGL) for signs of whether a bull or bear market is in force.

But in the real world, it’s the Russell 2000 stocks that you should be watching. That’s because there is no other group that better represents the market’s appetite for risk.

Those large-cap technology stocks may as well be money market accounts these days. Investors flock to those names because they represent a “safety trade.”

But the small caps represent the real risk/reward barometer of the market.

And right now, the small caps are flashing a warning sign that there’s a storm coming.

I recorded a video explaining exactly what’s behind these storm clouds and the historically dangerous signal we just got. Click the video below to see what we can expect next… and the move you should make now before the panic selling spreads across the markets.

P.S. September’s selloffs should provide an excellent opportunity to buy some of your favorite stocks at a discount. But Chris recently put together a presentation on how you can invest in today’s leading companies — even pricey AI names! — at a fraction of the cost of traditional methods…

Imagine being able to make a long-term investment in NVDA for just $99 per share RIGHT NOW… instead of $470.

It all boils down to an under-the-radar strategy Wall Street doesn’t want you to know about… Click here to get all the details.

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