Editor's note: A critical market deadline is fast approaching... and there's no time to waste.
Last week, we wrote to you about the history of the Russell 2000 small-cap index. We explained how the index got its start in the 1980s. And we covered how its popularity surprised even its own founder, George Russell.
But that's not where the story ends. You see, an urgent event involving the Russell indexes is fast approaching. It takes place every year, like clockwork.
And as we explain in this essay – updated from a June 2023 Altimetry Daily Authority – you only have a short time to buy in for the biggest upside...
Mark your calendar right now...
June 26 will be one of the most important trading days of the entire year.
No, I'm not predicting the recession will hit that day... or that some sort of "black swan" event will throw stocks into chaos, a la the COVID-19 panic of March 2020.
Even so, for a lot of microcap companies, June 26 will be just short of life or death.
It's guaranteed to be one of the busiest days in the market. And you need to be prepared. More than $10 trillion worth of investments could move during that one trading day.
It may seem odd that I'm so confident in the face of such an uncertain market. There's a simple reason, though...
June 26 is "reconstitution day."
It's an event in which all of the Russell indexes are rebalanced. Historically, they've reflected market changes from the past 365 days. Starting this year, the rebalancing will take place twice – once in the summer and once in December.
And that makes June 26 one of the most anticipated, most followed events in the financial calendar.
Reconstitution day is still a couple months away. But as we'll explain, we only have a couple weeks to get in position.
The Russell rebalancing is a huge deal for small companies...
The Russell indexes are a group of benchmark indexes used by investors around the world. They track the performance of the U.S. stock market.
There are three major ones to track...
- The Russell 1000 – The 1,000 largest publicly listed stocks in the U.S.
- The Russell 2000 – The 2,000 next-largest publicly listed stocks in the U.S.
- The Russell 3000 – The Russell 1000 and Russell 2000 combined.
These indexes cover the majority of U.S.-listed stocks by market capitalization that investors can buy. So a lot of folks track them. And pretty much all of these investors are watching – and waiting – to see what will happen.
As we said, "reconstitution day" isn't until June. But the upside starts much earlier... on what's known as "rank day."
That's when the team at FTSE Russell, which creates the indexes, will review the 3,000 or so largest companies in the U.S.
These folks will figure out which companies they're going to remove from the indexes because they've shrunk too much. They'll decide which companies will replace them. And on April 30, they'll release their preliminary lists to the investing public.
The very smallest companies added to the Russell 2000 are all microcaps. These tiny stocks often experience much bigger price swings than their larger peers.
Well over 200 companies can be added to or subtracted from the Russell 2000 in a rebalancing. That's a lot of winners and losers.
And history shows some of the biggest runs higher (and lower) start on or around rank day... in anticipation of what's to come. Last year, the additions mentioned during rank day rose 17% before they were official... outpacing the Russell 2000's 11% return.
Keep in mind, institutional investors need to own these stocks to track the index's performance...
So when a stock is added to the Russell 2000, it suddenly gets a ton of new buyers.
On the other hand, when a company is removed from the Russell 2000, it has the opposite effect. Many investors and fund managers will need to sell shares of that company in order to match the index. The stock price plunges.
The average stock added to the Russell 2000 last year rose 53% in the six months following rank day. That's more than double the return of the index itself in that time frame.
The Russell 2000 is the only index that many microcaps qualify for. And that means reconstitution day can make or break these stocks.
Traders, investors, and speculators have a field day trying to figure out which companies will be added. They understand that what happens with the Russell 2000 can lead to massive moves in these companies' stock prices... and so do we.
In the lead-up to rank day, we've been hard at work, too... doing research for subscribers to our monthly Microcap Confidential advisory.
We put together a list of our top candidates for Russell 2000 inclusion this year. The companies behind these five stocks are backed by powerful tailwinds. They're all helping support major investment trends.
And we expect them to soar in the coming months.
We also published a "blacklist" of stocks that could get dropped from the Russell... and that investors should stay away from at all costs. Learn how to access these reports (plus a host of other bonuses) right here.
In just a couple weeks, FTSE Russell will release its first set of preliminary lists...
It won't make its choices official until June 26. But for the best shot at maximum upside, you have less than 10 days to pick up shares of the biggest winners... and get out of any potential pitfalls.
This is one of the best opportunities to find under-the-radar ideas in the microcap space. It only comes around once a year. So you can't afford to let it pass you by.
And check out the deletions list, too. If you're holding any of those stocks, you may want to reassess.
Regards,
Joel Litman
April 20, 2026
