Trading Nation

Don't fight this trend: Trader

Don't fight this trend: Trader

Small-cap stocks have seen some large returns this year.

The index is up 6 percent year-to-date outperforming the broader S&P 500 which is up just 2 percent over the same period. And according to one trader, the charts are setting up for even more gains.

"If you look at the chart of the Russell 2000 from its early May low, you can see that it has outperformed both the S&P 500 and over that period," CNBC contributor and technical analyst Todd Gordon said Friday on CNBC's "Trading Nation." And Gordon believes that relative outperformance will continue through the second half of the year. "It's better to be trading with the stronger trend than to try and play catch up."

Looking at the , the ETF that tracks the Russell 2000, Gordon noted that there's been a nearly 1.5 percent pullback from the all-time high hit earlier this week, which has brought the chart to critical support levels. And it's that pullback that is creating a perfect buying opportunity for investors.

"We've found support between $127.50 and $127.14 to a critical Fibonacci retracement level," said Gordon, founder of "I think that support should hold and that's my basis for this long trade."

And if support were to hold, Gordon believes the next level for the ETF could be near resistance between $129.63 and $133. That's up to a 4.5 percent rally from current levels and would mean a new all-time high for the Russell 2000.

The Russell 2000 was slightly lower during Friday's trading session.

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