Small Caps Lag

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 |  Includes: EWSC, IWM, RWM, SRTY, TNA, TWM, TZA, URTY, UWM, VTWO
by: Bespoke Investment Group

If you follow small cap stocks at all, you know they have been underperforming for quite awhile now.

The chart below shows the relative strength of the Russell 2000 vs the S&P 500 over the last 12 months. When the line is rising, small cap stocks are outperforming the S&P 500 and vice versa. As shown, small caps have been making a number of lower highs relative to the S&P 500 over the last several months.

Interestingly, the most recent peak came on 9/14, which was the exact day that the S&P 500 peaked. For those that would argue that the market needs small caps to lead in any rally, this chart would be exhibit one.