Trend Signal Now: Small-Cap Financials on the Brink

Tuesday, February 10, 2026

Small-Cap Financials on the Brink

The weight of the evidence in small caps keeps pointing in the same direction: higher.

The Russell 2000 has already completed a 4-year base and broken out to new all-time highs. When you break it down sector by sector, the underlying strength becomes even clearer.

Small-cap Industrials look great. Small-cap Tech is pushing toward new highs. Materials have gone near-parabolic, and even Biotech has been quietly working for some time.

But there's one key group that hasn't made its move yet: Small-cap Financials.

And that's what makes this so interesting.

Small-cap Financials are now pressing against the upper bounds of an 8-year base.

This group accounts for more than 17% of the Russell 2000, making it the index's second-largest sector.

A big chunk of that exposure comes from regional and community banks — some of the most economically sensitive stocks out there.

So think about the implications.

If Small-cap Financials break out from this massive base, it would be hard to come up with a more bullish confirmation for the Russell 2000 — and for the broader risk-on environment.

We're already seeing broad participation across the index. Financials would be the final piece that completes the picture.

I really like how Customers Bancorp $CUBI is shaping up:

Check out that base.

Risk is clearly defined at those former 2022 highs, giving a clean level to manage against.

I only like to take a long position in CUBI if and only if we break above 78.

Alfonso De Pablos, CMT

Director of Research, All Star Charts

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Alfonso De Pablos, CMT | Director of Research, All Star Charts

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