The End May Be Near for the Small-Cap Stock Rally
In my Oct. 26 Barron’s column, “Why Small-Cap Stocks Are Poised to Outpace Large-Caps,” I detailed why my analysis had turned bullish on small-cap stocks. Since then, small-cap stocks have led their big-cap brethren by 20 percentage points. In a report to clients last week, I wrote that the best part of the strength in small-caps was nearing completion. Why? Because the S&P 500 ratio had entered a powerful 15-year resistance area. The chart below illustrates why the Russell 2000’s advance should begin to stall. A weekly chart of the Russell 2000 divided by the S&P 500 is bum...
Source: barrons.com