Small stocks logging biggest gains in 2016

An index of small stocks is sporting the biggest gains of all the major U.S. stock indexes so far in 2016. That’s the good news.

The bad news is the Russell 2000 small-company stock index hasn’t made a new all-time high since it peaked more than a year ago on June 23, 2015.

In contrast, the Nasdaq composite made a fresh record high Tuesday, the Standard & Poor’s 500 made a new all-time high Friday and the Dow Jones industrial average posted its last record in late July.

The fact that the Russell 2000 leads the performance charts this year is viewed as a positive, as it is viewed as a so-called bull market index because it tends to rise when the overall market is strong and investor risk-taking is on the rise. On the negative side of the ledger, Wall Street chart-watchers always like to see all the major stock indexes make new highs at the same time. Such a broad advance is often viewed as confirmation that the uptrend is widespread, strong and intact.

Heading into Wednesday’s trading session, the small-cap stock gauge was about 5% below its record close of 1,295.80 notched in June 2015.

A breakout in coming weeks to a new high for the small-stock index would be viewed as a bullish sign for a stock market that continues to surprise to the upside despite plenty of naysayers.

If, on the other hand, the Russell 2000 fails to rewrite the history books and post a new high, it could be a sign the stock market is running on fumes and has little upside energy left.