We’ve seen some pretty extreme trends over the years, but the recent run of small caps ranks right up there with the best of them. As noted in our Closer report from Monday, the Russell 2000 was further above its 200-day moving average (DMA) than it has ever been before. After Monday’s close, the Russell 2000 was also already up 10% for the month.  While a 10% MTD gain in just six trading days may sound impressive, this month’s performance to start the month was only the best since November – three months ago!  Not only that but in the two months (December and January) between those two 10%+ gains, the Russell 2000 was up over 5% in the first six trading days of the month, and in October it was up over 8%.  In other words, in each of the last five months, the Russell 2000 has been up at least 5% MTD after just six trading days.  It gets even crazier too.  Back in June and August, the Russell 2000 was up 10.25% and 7.04%, respectively, after just six trading days.

In the entire history of the Russell 2000 dating back to 1979, the Russell 2000 has been up at least 5% MTD after six trading days 35 times (7% of all months) and there have never been more than two months in a row of back to back 5%+ starts to the month.  In the last nine months, however, there have been seven 5%+ starts to a month including a streak of five straight.  Included in those seven months, three have also been gains in excess of 10%, and prior to June 2020, that had never happened before.  In the wake of last year’s COVID crash, the rotation into small caps has been unprecedented.  Click here to view Bespoke’s premium membership options for our best research available.

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