Violent small-cap rebound paints optimistic picture for long-suffering corner of the market, technicians say

Technical analysts were upbeat on U.S. small-cap stocks Wednesday as they added to gains, a day after a subdued October consumer price index saw the benchmark Russell 2000 lead a broad equity rally, turning the market pecking order upside down.

The 5%-plus Tuesday surge saw the small-cap benchmark Russell 2000 RUT turn positive for the year. More meaningfully, the move may have allowed the index to carve out an “inverted head-and-shoulders bottom,” said technical analyst Andrew Adams, in a Wednesday note for Saut Strategy.

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