Momentum surge for small-caps… 10-day % change for Russell 2K in the 99th percentile of all historical observations since inception (1978). Bodes well for forward performance. @StrategasRP #stocks $iwm pic.twitter.com/6GSey7IN99
— Chris Verrone (@verrone_chris) October 8, 2020
Today’s Chart of the Day was shared on Twitter by Chris Verrone of Strategas Research (@verrone_chris). Small-Caps have shown some notable signs of improvement over the past two weeks. The Small-Cap Russell 2000 index has outperformed the Dow, S&P, and Nasdaq for six straight days now. It’s not every day that you see the Russell up more than 12% in just 10-days like this. While some might view this as an overbought signal, Chris explains that these momentum spikes have historically led to further gains for the Russell 2000. Small-Caps tend to be risker and more aggressive than their Large-Cap peers. So, the fact that they’ve begun to outperform recently is a testament to healthy risk appetite among market participants right now. It’s hard to view this development as anything but bullish for the broader market.