Why is it more bullish for the stock market if small cap stocks out-perform large cap stocks? Because small cap stocks tend to represent higher volatility, higher risk, and higher potential return in bull market phases.
But the reality is that the equity markets (as represented by the S&P 500 index) have been moving higher through much of 2021 without the participation of small caps. Or have they?
In today’s video, we’ll consider the performance data from 2020 and 2021 on small cap stocks vs. large cap stocks and discuss why the recent breakout for the Russell 2000 should be seen as a bullish sign for equities. We’ll also discuss the sector themes at work and why renewed strength in small and mid cap names represents investor optimism.
– Which cap tiers have performed best year-to-date in 2021? What about since the March 2020 market low?
– Why have small caps been under-performing since the spring, and what does the recent breakout for the Russell 2000 and S&P Small Cap 600 Index represent?
– How does the renewal in small cap strength relate to seasonal trends during the calendar year?
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(VIDEO) Analyzing Stock Market Performance by S&P Cap Tiers
S&P Cap Tiers (Small, Mid, Large) Performance Y-T-D Chart
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The author may have positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
