Gavekal Capital: What Goes Up Must Come Down? Small Caps Have Outperformed On The Way Up

Thursday, December 12, 2013

What Goes Up Must Come Down? Small Caps Have Outperformed On The Way Up

A common theme off the bear market low of 3/9/2009 has been the relative outperformance of small-cap stocks vs large-cap stocks. This latest advance since October 1st has actually seen large cap stocks outperforming small cap stocks. This has happened during a few instances over multi-year advance but not very often as the chart below shows. The question to ask is this: if we are beginning to see a longer period of small-cap relative underperformance is this another example of market breadth deteriorating and the bull market narrowing (as we have highlighted here and here recently)?

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