Small Cap Stock Index in a bear trend

Executive Summary

  • In 2023 most Wall Street Strategists have been telling investors that the bear market is over and we are in a new bull market. 

  • Historically small cap stocks lead coming out of a bear market.

  • Said another way, small cap stocks traditionally have better returns than blue chip companies coming out of a bear market because they are more economically sensitive (they tend to benefit from an economic turn-around sooner than large companies due to their smaller, more nimble size).

  • Below we see the S&P 600 Small Cap Index [$SML] is in a bear trend, putting in an extended series of lower highs (also known as failed rallies).

  • In my opinion the Small Cap Index being in a bear trend contradicts Wall Street’s ‘all is well thesis’ and if we are truly in a new bull market the Small Cap Index should be putting in new highs.

LPL 492000-1

DEFINITIONS

S&P 600 Small Cap Index - The S&P SmallCap 600® seeks to measure the small-cap segment of the U.S. equity market. The index is designed to track companies that meet specific inclusion criteria to ensure that they are liquid and financially viable.

 

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This correspondence expresses the opinions and views of the author as of the date indicated and are based on the author's interpretation of the concepts therein and may be subject to change without notice.  Neither Highcroft Investment Advisors, Gerald Asplund, nor LPL Financial, has no duty or obligation to update the information contained herein. 

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Major Indices in a 2 Year Bear Trend

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Dow Jones Industrial Average Index bear trend continues