Small Caps Lead the Way in Destroying the Bear Market

One of the arguments of Bears of late is the rally over the past few months from oversold conditions in March has been very narrow.  Well, the month of May has certainly killed that argument.  As the table below (data from S&P website) indicates, 64% of the stocks in the S&P 500 advanced during the month.  In fact, 56% outperformed the 1.07% price return in May:

Looking at smaller capitalizations as well, it is clear that performance wasn't as narrow as many would have us believe.   In the S&P 400 Mid-Cap index, only 3 sectors had mixed results, while the rest saw advances of at least 60% of the constituents.  Similarly, in the S&P 600 Small-Cap index, only Financials saw more losers than winners (just slightly).  So, while the very best stocks sure seem to be concentrated in a few sectors, most stocks are going up nonetheless.

For folks who spend a lot of time looking at the S&P 500, it is probably a good time to see what is going on in the even broader market:  Small-Caps are leading the way.  After underperforming for a couple of years, the Russell 2000 is now showing leadership, another indicator in my opinion that we are no longer in a Bear market.

Disclosure:  None.