- Small-cap stocks enjoyed a bit of a bounce yesterday but they've lagged the broader market this year, and Credit Suisse predicts more pain ahead.
- Even though many individual growth stocks have been hit much harder, the Russell 2000 has dropped only ~9% from its early March 2014 peak; average and median pullbacks in the Russell 2000 since the mid-1990s have been a respective 21% and 14%, so Credit Suisse thinks the historical track record points to the Russell approaching 1,000 (vs. its YTD peak of 1,209 and Friday's close of 1,097) before finding a bottom.
- The iShares Russell 2000 ETF (IWM) is down ~5% YTD, with its biggest losers - MLI, MDSO, FNGN, ISIS - all plunging at least 40% so far.
- Meanwhile, the S&P continues to hold up relatively well, and Citigroup’s Tobias Levkovich thinks easier lending standards for bigger companies is an important factor explaining large-cap outperformance; Bespoke sees large-cap stability holding just as much weight as the argument that weakness in momentum names eventually will spill over to the broad market.
- ETFs: IWM, TZA, TNA, UWM, VB, VBK, URTY, SCHA, TWM, IWO, RWM, SRTY, DWAS, VTWO, JKJ, FYX, VTWG, UKK, SKK, EWRS, JKK, TWOK, SMLV, PXSC, FYC, PXSG