Relative Strength: Size Matters

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 |  Includes: IVV, IWM, OEF, SLY, SPY, VB, XLG
by: Bespoke Investment Group

No matter where you turn these days, analysts seem to favor large caps over small caps, and as the chart below shows, it's for good reason. On a relative basis, small cap stocks have been underperforming the S&P 500 since April 2006 (rising line indicates small caps outperforming large caps).

Russell_2000_vs_sp_500

In the chart below, we show the relative strength of the S&P 100 (largest stocks in the S&P 500) versus the S&P 500. After a brief period of underperformance during the first quarter of the year, the S&P 100 has been outperforming the S&P 500 and is now poised to take out its highs from late last year.

Sp_100_vs_sp_500_3