Several places have noted the difference in performance between small-caps and the S&P 500. Let’s look:
Some say this indicates the overall top of the stock market: ‘small-caps lead the way’. Others look at the situation another way – long-term correlations between the various US stock indices is very high (usually around 0.8-0.9 in the long term), so a trade is in order: long Russell 2000 versus short S&P or Nasdaq.
I’ll be testing this out with some of my favourite levered ETFs.