Small-Cap Stocks Are Sounding a Very Scary Alarm. Here’s How to Protect Yourself… and Even Profit.

Group 1 - The small-cap investing sector is viewed negatively, particularly due to the iShares Russell 2000 ETF, which has become a collection of highly indebted companies [1] - Approximately 40% of stocks in the Russell 2000 index are at risk from sustained higher interest rates, as they will need to refinance existing debt at potentially higher rates [2] - The performance of small-cap stocks has lagged behind large-cap stocks, primarily due to the dominance of large tech companies, which has diminished the traditional advantages of small-cap stocks [4][5] Group 2 - Current charts for small-cap ETFs, particularly the IWM, indicate a negative trend, with both the 20-day and 50-day moving averages showing downward movement [6][7] - The weekly charts also reflect vulnerability, with similar patterns in moving averages and a potential for significant declines, reminiscent of a previous drop of nearly 30% [8]