Why Small-Cap Stocks (IJR, SCZ) Are Set to Surge Now

Casey Murphy has cultivated a deep passion for finance through years of expertise in active trading, technical analysis, market insights, ETFs, commodities, futures, options, and forex (FX).

Smaller companies with lower market capitalizations often fly under the radar due to their higher risk compared to large-cap counterparts. Yet, when approached with the right trading tactics, these small-cap stocks can unlock exceptional growth opportunities—a goal many investors have pursued, especially since recent market shifts. In this article, we’ll analyze key charts and outline effective strategies to gain exposure to small caps while managing downside risks. (For more, see: An Introduction to Small Cap Investing.)

iShares Core S&P Small-Cap ETF (IJR)

ETFs have become a popular tool for investors seeking targeted exposure to specific market segments. The iShares Core S&P Small-Cap ETF (IJR) stands out as a prime vehicle for investing in U.S. small-cap stocks with cost-efficiency and tax advantages. Boasting an ultra-low expense ratio of 0.07% and a diversified portfolio of 603 holdings, this ETF is a favored core asset in many portfolios. Chart analysis reveals a consistent uptrend over the past year, with the 200-day moving average reliably acting as support during pullbacks. Traders are also monitoring dotted trendlines that serve as critical guides for placing orders. A bullish stance is expected to persist unless prices fall below key support levels at $67.33 or $63.48, depending on individual risk tolerance. (For more, see: Top 5 Small-Cap ETFs.)

iShares MSCI EAFE Small-Cap ETF (SCZ)

For investors aiming to diversify internationally, the iShares MSCI EAFE Small-Cap ETF (SCZ) offers exposure to small-cap companies across Europe, Australia, Asia, and the Far East. While its expense ratio of 0.40% is higher than IJR’s, it remains reasonable given the broad access to over 1,600 global holdings. The chart pattern mirrors that of IJR, with traders watching the dotted support levels closely, typically placing stop-loss orders below $52.09 or $50.30 based on risk appetite. A notable bullish signal is the recent crossover of the 50-day moving average above the 200-day moving average, signaling strong upward momentum and reinforcing confidence in further gains. (For more, see: What is the Best Small-Cap ETF?.)

Final Thoughts

Although small-cap stocks often receive less attention due to their inherent risks, the strong upward trends in ETFs like IJR and SCZ suggest promising opportunities ahead. Technical indicators reveal that bullish momentum is firmly in control, and this positive trajectory is likely to continue in the near term. Investors seeking growth with calculated risk should consider these small-cap ETFs as valuable additions to their portfolios. (For related insights, see: Valuing Small-Cap Stocks.)

Disclosure: At the time of writing, Casey Murphy did not hold positions in the mentioned ETFs.

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