My original intent for today’s piece was to focus on implied vol versus historical, but the eye-popping breakout in small-caps demands an audible. I’ll pick up on volatility in Thursday’s Options Theory blog.

Well, friends, the coiled spring finally popped. BIG TIME! And this time, I think it will stick. Since February, the small-cap laced Russell 2000 (RUT or IWM) has been mired in a range. For nine long months, IWM traveled a circuitous route to nowhere while large-caps were printing record highs month after month.

We’ve seen half a dozen breakout attempts over the north end of the range, but all of them ultimately failed. Before today, $160 was the vast graveyard in the sky where rallies went to die.

As a CMT toting chart addict, I love the following phrase and have found it to be accurate more times than not:

The longer the base, the higher in space!

All breakouts are not created equal. Those forged in the fiery furnace of a long-lasting congestion phase typically see the strongest follow through. This is why veteran traders love finding stocks on the cusp of breaching a critical resistance zone. Picture a NASA rocket, fueled up on the launchpad, ready for flight. The astronauts are buckled in, the weather is fair, and all we’re waiting for is for the boss’s boss to say, “Go!”

After weeks, nay months, of waiting, the Russell finally got the green light.

If you find yourself surprised by today’s launch, then you haven’t been paying attention. Like at all. How many signals do you need? How many nods, winks, or hand waves do you need before you take note that a stock a breakout is looming? I feel like IWM has given a million of them before today’s jump. It even built a pretty little bull flag over the past three weeks right to the rising 20-day moving average before finally pole-vaulting over resistance.

For those of us who follow small-caps daily, today was a day we’ve been anticipating for months. Price played its part perfectly. Did you know IWM rallied for 14 of the first 15 5-minute candles today? The buying was relentless. It doesn’t always work out this well, but when it does boy oh boy does it feel good.

Volume did a fantastic job confirming the legitimacy of the break by logging the highest volume day since mid-October at 24.4 million shares. What’s particularly exciting is that IWM hasn’t even gone anywhere for almost two years. This rally could just be getting started. It will probably take a while, but last year’s peak at $173.39 is the obvious target.

I pity bears in this environment. The one thing they had going for them in the face of large-cap strength was small-cap suckitude. But no longer. IWM is off the bench and in the game. Whatcha got now, bears?

Iron Condors naturally got smoked today, but we knew this was coming. My question to you is, did you prepare? This Wednesday we’ll be hosting a second MasterMind Group meeting for Cash Flow Condors. Two in one month?! It’s like Christmas came early. Join me, and we can discuss the outlook for our beloved birds going into the holidays.

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