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Are Small Caps Breaking Out? IWM

beebee
in Fund Discussions
According to Jon Krinsky at Baycrest, 83% of the Russell 3k names got back above their 200-day moving averages last week, a record going back seven years to 2013. It wasn’t bearish then and it’s not likely to be bearish now.
small-caps-break-out-of-two-year-consolidation

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Comments

  • BenWPBenWP
    Small value does seem to be making a comeback. Two ETFs I've been following, DES and CSB, have some momentum now.
  • WABACWABAC
    Small cap value has a long way to go.
  • Derf
    Yes it does & I hope it continues !!
    Derf
  • WABACWABAC
    Derf said:

    Yes it does & I hope it continues !!
    Derf

    Me too.
  • MikeW
    Yes I was researching a number of small value and blend ets over the weekend. Just bought IJR yesterday. Small cap blend tends to outperform SPY significantly in early stages of a recovery.
  • beebee
    Food for thought:
    The Russell 2000 Index of small cap stocks is currently on pace for its best month ever. As of Tuesday afternoon, it’s now up more than 20% for the month of November. I looked at every double-digit return month for the Russell 2000 going back to 1979 and then calculated the total returns for the ensuing 1, 3 and 5 year periods to see how they performed after those wonderful months:
    what-happens-to-small-caps-after-a-huge-monthly-gain/
  • MikeW
    Thanks @bee. I was reading a similar analysis from a newsletter I receive last night.
  • Observant1
    edited November 2020
    I just checked Vanguard Tax-Managed Small Cap Fund (VTMSX).
    Returns for the past month and three months are 14.35% and 17.57% respectively.
    VTMSX was clobbered earlier this year (-32.24%, Q1 2020) but is now up 6.07% YTD.
  • MikeW
    Yes thats a good fund. You also should take a look st NUSC which has better long term performance but hasnt rallied as much in the last couple of weeks. Its an ESG fund. A little growthier. Nice consistency in this fund too.
  • msf
    IJR and VTMSX should track pretty closely, because they're both based on the S&P 600. The former is a pure index fund that is designed to track the index. The latter "purchases stocks included in the S&P SmallCap 600 Index—an index that is made up of stocks of smaller U.S. companies—in approximately the same proportions as in the Index" but is managed for greater tax efficiency. (Quote is from summary prospectus.)
  • Observant1
    edited November 2020
    msf said:

    IJR and VTMSX should track pretty closely, because they're both based on the S&P 600. The former is a pure index fund that is designed to track the index. The latter "purchases stocks included in the S&P SmallCap 600 Index—an index that is made up of stocks of smaller U.S. companies—in approximately the same proportions as in the Index" but is managed for greater tax efficiency. (Quote is from summary prospectus.)

    You are correct that these two funds will track closely.
    One can click the link below and then add the IJR ticker to compare the funds' pretax / tax-adjusted returns.
    Link

  • beebee
    Smidcap stocks are on fire. The Russell 2000 RUT, +0.55% is up over 19% this month compared to 10% for the S&P 500 index SPX, +0.24%.

    Will it continue? This group has been beaten and battered for so long that many people simply doubt the move. But this is a big mistake. I don’t know about the next few days ahead, but smidcaps will continue to do well over the next year for the following five reasons.
    Small and midcap stocks will keep rocketing higher for 5 big reasons

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