Small Caps Not Out of the Woods Yet

Small Cap stocks were the place to be until last July, when the small cap cycle finally petered out. They were hammered pretty hard going into mid-March, but have outpaced the S&P 500 over the past two weeks, with Monday’s price action providing much of the difference. Was it just short covering or the start of something bigger?

A solid two weeks for sure, but the Russell 2000 is unlikely to outpace the S&P 500 until portfolio managers begin to feel comfortable taking on more risk. But taking the pulse of small caps is a daily exercise for me, along with questioning sector weightings.

Citigroup’s small-cap strategist Lori Calvasina runs fairly sophisticated models, and shares some of her findings with Barron’s Bob O’Brien. She is still recommending a defensive posture, especially with smaller utilities and telecoms and selected healthcare.

And you might find her comments on financial stocks interesting as well.

Comments:

<< Back to main