Banks Keep Struggling

JC Parets
February 26, 2024

Small-caps have had a really hard time this year.

Almost every Small-cap sector is down since the highs in late December. That was 2 months ago.

The day the US Dollar Index bottomed was the exact day that Small-caps stopped going up in price.

That was also the same day that the US 10yr Yield bottomed.

I don't believe that was a coincidence.

You're welcome to.

What I see is a group of stocks struggling to make any progress. It's hard to underperform the Small-cap indexes, but somehow Financials found a way.

Here are Small-cap Financials, which are loaded up with regional bank stocks, rolling over and making new 4-month lows relative to the Small-cap 600 Index.

So not only are small-caps having a hard time in 2024, somehow the regional bank stocks are having an even worse time.

Here's a different look. This is the Regional Banks Index vs Small-cap Russell2000:

The Russell2000 Small-cap Index is slightly different than the Small-cap S&P 600 Index.

And it's not just the number of companies in the index. The weightings are slightly different as well.

But the conclusion here is the same.

The smaller financial companies are the worst stocks of all the smaller stocks.

This is a great example of not having to decide which index to analyze. The answer is we look at both.

That's almost always the answer in these situations.

As Yogi Berra once said, "When you hit a fork in the road, take it!"

JC

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