The Russell 2000 has been capped by resistance since 2007 (red lines and arrows) near 850. So at this juncture in order to really embrace small cap, the market needs to show it can rip through this level, since so far it has failed to since 2007 ! The R2000 is now nearing a support zone (green lines) near 775 - 750. If that is violated the weakness continues. At this point you're in a range between support and resistance and it can go either way, thus it makes no sense to take a big swing either way.
It boils down to risk tolerance (do you buy here with tight stops and blow out on a breach of support ? or Do you wait and pay up on a confirmed break out above resistance to make sure a durable move is under way ? - for me I am vote for the latter.)
Everyone is saying stimulus is good for equities and equity values should rise, yet they are struggling here. Most likely recent activity is correcting the excesses, and the usual summer weakness, however at this point it makes sense to observe, more than participate, until the odds line up better for a better pitch to swing at.
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