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)?