Mid Caps Outperforming Small and Large Caps

by: Babak posted on: June 02, 2008 | about stocks: DIA / IJR / MDY / QQQQ / SPY    

Here’s an interesting chart comparing two slices of the US stock market:

In early April, around the time the stock market recovered from the March bottom, suddenly the Mid Caps (right axis) and the Large Caps (left axis) parted ways.

This is rather strange because they walked hand in hand for a very long time. I’m not sure why exactly. Even more puzzling, the S&P 400 Mid Capitalization Index  also outperformed the S&P 600 Small Cap Index - not shown on chart.

Any ideas why the Mid Caps are hitting the sweet spot now?

The market does tend to go through drawn out cycles when the large caps and the small caps take turns leading.

Here is an updated chart of this relationship showing that maybe, just maybe, the small caps are about to regain the limelight:

And here is the same chart, this time comparing the Mid Caps to the Large Caps. No question here which is leading:

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Babak

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This article has 1 comment:

  •  
    yhoomajor
    Jun 05 09:27 PM
    My Website
    This is one of the strangest thing going on there on the wall street its getting stranger day by day. MDY has moved up, almost non-stop, for last two months.

    Why? MDY (S& P mid-cap 400) is loaded with - Tech, Energy, Matreial and Agri companies. On any given day during last two months, one or more of the above sector was in the green. On many days all sectors were up.

    So wdhen energy is up, MDY goes up. When Oil is down then Tech is up and MDY moves up. When everything else is slow, fertilizers and materials move up and MDY goes up.

    Curious how long it can defy gravity.
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