Weekly Update: Do Small Caps Still Lead the Broader Markets?

We've all heard that the small capitalized publicly traded companies lead the larger cap companies, more so featured in the broader indices. A quick look back shows the Small Caps Topped in November 2021, whereas the Nasdaq and SP500 did not top till January 2022. Subsequently, the IWM bottomed in June of 2022, and it took the NDX and SPX till October of 2022 to form a bottom.

So it appears we do not have to go back too far to see this phenomenon is still valid. If this price action of leading the broader markets continues to persist, then the IWM is now poised to literally "Drop like Rock".

A quick observation shows the small caps are around their lows bouncing slightly for wave 2 in our primary c-wave down. You can read my prior posts on the SPX and NDX indices but it appears if you want to know if the recent bullish feeling rally in the DJIA, NDX and SP500 has sustainable legs...look no further than the IWM.

Best to all,

Chris