The Russell 2000 small cap index looks like it will be the first major US stock index to go full on Bear: All time high (intraday): 2,458.86 (Nov 08, 2021) All time high close: 2,442.74 (Nov 08, 2021) Last Price: 1,987 So a close below 1,954 would confirm a bear market in small caps.
Small caps were weak all year in Canada. So this is old news. A true contrarian play would be to buy areas of weakness now ( Gold miners, China, Canadian small caps ). Might be a touch early but I'm keeping an eye on all three areas.
Correct. People laugh at me for using small caps as a barometer but the way I look at it is if no one is buying shit stocks, then there isn't any irrational exuberance which means reality is going to hit at some point. Many thought IWM was setting up for a massive breakout on a technical basis (LOOK AT THAT YEAR LONG CONSOLIDATION) but anyone who trades Russell knows that it was bullshit.
Small caps lag behind because the hot money has been chasing large tech and other hot rods. Now with covid almost gone and businesses open up, we should see profits at small caps improve. The question is if the money coming back to whole market, or hot money still chasing the hot rods. I'd like to see cash moving away from large techs to mid cap and small caps. But who knows.