Monday's small-cap surge

It was kind of a weird day in equity land on Monday. Perhaps due to traders becoming optimistic about smaller businesses starting to open up again, the small-cap Russell 2000 soared and left other indexes far behind.

Russell 2000 surge

Source: Bloomberg

The Russell doubling the return on the S&P hasn't happened many times since 1979. All of them have triggered since the year 2000.

The S&P managed to rise over the next few sessions every time but once. For the Russell, returns were worse. That means the ratio between them usually suffered. 

Russell 2000 to S&P 500 ratio

Bulls are mostly hoping that small-cap outperformance can continue. It's trying to turn up after a plunge, and it should be a good sign going forward. Historically, though, it's been tough to do so after such a big difference in returns like we saw on Monday.

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We also looked at:

  • More than 95% of energy stocks are above their 10-day moving averages, but few are above their 200-day averages
  • The Barrons' Big Money poll showed an uptick in optimism among money managers, but it's still historically low
  • More and more indexes are recovering above their 50-day averages
  • Internet companies have surged
  • Our Optimism Indexes for IBB, XLV, and XOP have reached near-record highs

The post titled Monday's small-cap surge was originally published as on on 2020-04-28.

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