Last week we compared the recent performance of the Nasdaq to the small-cap Russell 2,000. Below is a look at the relative strength between the Nasdaq 100 and the Russell 2,000. The chart shows the ratio of the Nasdaq 100 to the Russell 2,000 since 1985. In the late 90s, the Nasdaq soared versus the Russell, with the ratio rising from 1:1 in the mid-80s up to 8+ at the peak of the Dot Com bubble. The ratio came crashing back down to the low 2s in the mid-2000s, but it has been on a steep upward trajectory for the last 12 years.
Over the first two months of 2020, with small-caps underperforming and the Nasdaq outperforming, the ratio spiked more than two points from ~5 up to 7.5 at its recent peak. We’d note, however, that since the Covid Crisis hit, we’ve seen the ratio trade sideways in what looks to be a peak for the time being. One day small-caps will have their day in the sun again, it’s just a matter of how long it takes for that to happen. Click here to view Bespoke’s premium membership options for our best research available.