Small-caps Do The Running Man

Of course, one index has roughly 2000 stocks, and the other has about 600.

But other than the obvious, what makes them different?

According to S&PGlobal,

"Unlike the Russell 2000, the S&P 600 uses an earnings screen—companies must have a track record of positive earnings before they are eligible to be added to the index".

Looks to me like the group that doesn't need positive earnings is now back near those former highs from December, while the group that does need a track record of positive earnings is nowhere near those former highs:

To me, going sector by sector is probably even more important than these indexes themselves.

One thing you'll find by going through that process is that only 1 sector, of all the Small-cap sectors, is above its December high.

Here's what those Small-cap Industrials look like.

This is the "Small-cap leader":

You see higher highs in price, that haven't been able to hold, and the bearish momentum divergence on the way up?

What happens to these small-cap indexes if the only one not going down in price, starts to go down in price?

What then?

All eyes are on the Russell2000 Index. Look at this mess.

The Value Line Geometric Index, representing the median stock in the market, is doing the same thing.

Take a look:

Is this bull market about to really get going with broadening participation?

Or do these fail up here once again, just like they have every time over the past couple years?

We'll be discussing this all on Monday during our LIVE Conference Call for Premium Members of ASC.

Make sure to register for that here: Monday 3/18/24 @ 6PM ET

See you then!

Feel free to weigh in here in the meantime and we'll address any questions during the LIVE Video Call on Monday.

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As always, if you have any questions about recent price action and what's happening with markets right now, you can always drop us an email.