The Russell 2000 (^RUT) small-cap index has previously been suggested as an alternative to large-cap tech stocks that have dominated Wall Street in recent years. While the tech rally stalled in early August, could it be time for another breakout for small caps or Big Tech?

MDB Capital president and chief market strategist Lou Basenese joins Catalysts to give insight into small-cap trading and whether the asset class is poised to move higher.

"I think it's a risk-on risk-off market. We're getting back to risk-on. I think investors as a whole, on the macro level, have to see that the soft landing is going to materialize. There's been some finicky data that has not been consistent. It's a matter of 'are we going to a recession or just a slowdown?' I'd argue... that we're not anywhere near a recession," Basenese says on whether Federal Reserve rate cuts could hamper the momentum of recent rallies.

"The Russell 2000 has about 20 to 30% concentration in biotech. I think you want to look there because Big Pharma has to replace their their portfolio of drugs. It's happening. There's a patent cliff," Basenese explains. "But outside that, I think [of] a really simple kind of rule of three, focus on the big trends. What's propelling the large cap? So you've got AI cloud computing, cybersecurity, weight loss drugs, immunotherapies. Those same tailwinds for the big caps are going to be tailwinds for the small caps..."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino