Small-cap stocks are making big moves.
The Russell 2000 has rallied nearly 4 percent so far this year, outpacing the S&P 500 (up nearly 1 percent in the same time) and the Dow (down a bit less than 1 percent). Some market watchers see further room to run.
The group will continue rallying as the U.S. dollar gains ground, said Ari Wald, head of technical analysis at Oppenheimer. The dollar index has indeed surged this year, hitting a fresh 2018 high on Wednesday before turning modestly lower on the session.
In fact, since the dollar's 2018 low in February, small-cap stocks have outperformed large caps across every sector, according to an analysis from Bespoke Investment Group.
"The recent move higher has reversed the dollar's yearlong decline. We think the dollar does continue to stabilize, to move higher here, with resistance at the 95 level for the [U.S. dollar index], that we see some near-term upside, and I think the implications of that is that small caps do well," Wald said Tuesday on CNBC's "Trading Nation."