{"id":235793,"date":"2025-12-10T10:09:00","date_gmt":"2025-12-10T15:09:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=235793"},"modified":"2025-12-10T11:07:09","modified_gmt":"2025-12-10T16:07:09","slug":"chart-advisor-small-caps-continuing-to-break-out","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-small-caps-continuing-to-break-out\/","title":{"rendered":"Chart Advisor: Small Caps Continuing to Break Out"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">By\u00a0<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=efa74ba56d1e4946853e89aa51cd6469&amp;_e=CoCv1kWlkg9lhPTYjNsvRztMIWMoZOsIjHI0_beFKewURGDjAIpF2d-VxpnexFhn7DHrn67nvfnDPIsfXLIXsvXozrRyiav2CCJWNdMkVJDSz6FuVrn2E4i11Tx6RLIECdy6tJ60o-05uGbuTONTRHlnrxi9VruqEjYjgQcnvk39CY_QHKr0tUAecp7gUfMNCLSGuos5RsZKhmzjOFj7DZ_SJ_c5lS6okwwgmop79ptldUSmjrRicr_fc0Bf8rezSTQ_3chR22GAvs3kG7NbUlkeyVuqSV72PFx388bOU246DN01Gx-t_mki7fx7-6MaybT-o90N4UDV-igLDk3nwBmu7tSSVhP4BypIsUzxIR_ie4_hi02cKnIoDVOXwcCa352T5vtIUX30ULA39ThDw_n8WMMmjuznptDwkxviuVP-ofY8T28255M8a72HM7t9VnxleZN2gWBs0HHg6WJFCqdy75wfmOnzPFiRT9XvD4WMQc3Fa6b0nNhmRjrdomvUYzmumo9jcYaQV_dF-qgGtWS3vsUvv29T9SnT98ZkZzVddII4dcv0ui4ryaeVdLet\" target=\"_blank\" rel=\"noreferrer noopener\">Adam Koos, CFP, CMT, CEPA<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Small Caps Continuing to Break Out<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Investopedia is partnering with CMT Association on this newsletter. \u00a0The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in securities mentioned herein do not represent the views of CMT Association or Investopedia. Please consult a financial advisor for investment recommendations and services.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-small-caps-continuing-to-break-out\"><strong>Small Caps Continuing to Break Out<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">On the 4th day of \u201cChartmas\u201d the market gave to me\u2026<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Small caps\u2026 continuing to break out after an initial failed breakout (i.e., bull trap), and now they\u2019re holding important levels that make these smaller stocks a very strong candidate for inclusion in an investment portfolio.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Notice how far back in time those prior highs go \u2013 all the way back to late-2021\u2026 and the way I learned it from my mentors is, \u201cThe wider the base, the higher in space.\u201d<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"599\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWM_1-1100x599.png\" alt=\"\" class=\"wp-image-235794 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWM_1-1100x599.png 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWM_1-700x381.png 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWM_1-300x163.png 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWM_1-768x418.png 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWM_1.png 1488w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/599;\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">\u2026but it\u2019s not just small caps. Micro caps are breaking out in a similar fashion, going all the way back to a triple-top in early-2021.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So again, we\u2019re looking at an (almost) 5-year base here, with very clearly defined risk management (i.e., an exit strategy).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Also, can someone tell me how it is that the market is in the midst of a major top \u2013 ready to crash \u2013 if the smallest, riskiest companies in the U.S. are breaking out to all-time-highs?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">No rush. I\u2019ll wait\u2026<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"595\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWC-1100x595.png\" alt=\"\" class=\"wp-image-235795 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWC-1100x595.png 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWC-700x379.png 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWC-300x162.png 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWC-768x415.png 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/IWC.png 1488w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/595;\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">One of the reasons small caps are finally starting to come around \u2013 years after their big brothers and sisters (mid, large, and mega caps) have already broken out to their own, respective all-time-highs \u2013 is because rates are coming down.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Smaller companies don\u2019t have the buying power or financial leverage that big companies do, so when rates come down, this is very \u201cbusiness friendly,\u201d especially for the smaller \u201cMom &amp; Pop\u201d companies out there.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can see in the chart below how the 10-year Treasury Yield peaked in fall of 2023, and while you could call it \u201ctrendless\u201d at the moment (with some short-term choppiness and even a potential short-term breakout), the long-term trend is leaning negative, which is where it should continue if the Fed continues cutting rates into 2026 (which they likely will)<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"599\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/10-yr-Treasury-Yield-1100x599.png\" alt=\"\" class=\"wp-image-235796 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/10-yr-Treasury-Yield-1100x599.png 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/10-yr-Treasury-Yield-700x381.png 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/10-yr-Treasury-Yield-300x163.png 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/10-yr-Treasury-Yield-768x418.png 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/12\/10-yr-Treasury-Yield.png 1481w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/599;\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The 10-year Treasury is also closely tied to mortgage rates, by the way, so it wouldn\u2019t be a terrible thing for the housing market to see the chart above resolve lower.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Bottom line, lower rates are a good thing for small and micro-caps, and I\u2019ve never seen a bear market when the highest-beta stocks are breaking out, so I\u2019ll call this more positive evidence as we make our way into 2026.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you have any questions at all, feel free to email me personally, below.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Otherwise, stay tuned for day four of \u201cThe 5 Days of Chartmas\u201d in tomorrow\u2019s issue, and thanks, as always, for taking the time to read!<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8212;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Originally posted 10th December 2025<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By\u00a0Adam Koos, CFP, CMT, CEPA Small Caps Continuing to Break Out Investopedia is partnering with CMT Association on this newsletter. \u00a0The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in [&hellip;]<\/p>\n","protected":false},"author":186,"featured_media":235794,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[14,16727,15,18,6,8,9,22,23,26,3],"tags":[8205,6815,6686],"contributors-categories":[13686],"class_list":["post-235793","post","type-post","status-publish","format-standard","has-post-thumbnail","category-etfs","category-etps","category-fixed-income","category-macro","category-north-america","category-region","category-securities","category-stocks","category-technical-analysis","category-text-articles","category-traders-insight","tag-10-year-treasury-yield","tag-ishares-russell-2000-etf","tag-iwc","contributors-categories-investopedia"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin 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