Small-cap stocks are at a clear crossroads--either establish a bottom for the bear market collapse or sink into a new leg down. For the first time in several weeks, there are some positive signals worth noting on daily charts but weekly studies still lack the punch to suggest the lows are in place.

As for this week’s action, the Russell 2000 (NYSE:IWM) finally closed above opening levels on weekly charts. Hey, maybe it was only by 0.76%, but the weekly candlestick was still green! This marked the first close above opening levels on a weekly basis since this whole crash kicked into gear in mid-September. In fact, the last time the Russell closed above opening levels on weekly charts it represented the HIGHEST weekly close of 2008. Now, we’re down 31% for the year and down 38% from the bull market peak back in the summer of 2007. At last week’s lows, the market was down 45% from those record highs, roughly in line with previous recession-era collapses in the stock market dating back nearly 40 years.

While the weekly green candle is a nice minor (very minor) victory, the really positive signs are tied to how the market traded off the recent lows. First, small-caps rejected the move lows to close higher. Then, on a retest this week toward those lows, the market stalled downside momentum above the collapse trough and shot higher once again, leaving little “twin wick” bottoms on daily candlestick charts. If the Russell can mount a push to fresh move highs without taking that recent low, then it would further support the bottoming argument. In essence, we’re talking about a push back above 584, without a breach of 484. I’m even willing to trim that down even closer: I do not want to see the Russell slip back through the “figure” line at 500, especially on a closing basis. Decisive action below 500 would suggest at a minimum a retest of 468, and quite possibly further lows beyond that point.

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