With a monster rally of 16.5% over 15 consecutive up days, the small cap Russell 2000 has seen one of its longest winning streaks on record. On that subject, in today’s Chart of the Day sent to Bespoke subscribers, we looked at how the Russell 2,000 has historically performed following the four prior periods where it went 15 or more trading days without a decline. If you would like to see the report, click here to start a 14-day free trial now.
With the Russell 2000 up over 16% in the last three weeks, there have been a lot of big individual winners. In fact, 56 stocks in the index have rallied more than 50% since 11/3 when the winning streak began, with three of those names rallying more than 100%. The table below lists the 27 stocks in the index that have rallied 60% or more over the last three weeks. Looking at the list, a number of things stick out. First, you have probably never heard of most of these companies. Of the 27 names listed, just seven have market caps above $1 billion, while 15 have market caps of less than $500 million. In terms of sector representation, Health Care dominates the list with 14 out of 27 companies.
While the rally in small caps this month has gotten a lot of attention, one thing to keep in mind is that it has been a small-cap rally. Even with more than 50 companies in the index rallying more than 50%, the index’s total market cap has increased by just $305.9 billion. That may sound like a lot, and it certainly is, but to put that in the perspective of large cap stocks, the total gain in market cap for the Russell 2000 in the last three weeks has been less than the market cap of Johnson & Johnson (JNJ). That’s still nothing to sneeze at, but it shows that when it comes to rotation into small caps versus large caps, it takes a lot less to move the needle on small caps than it does large caps.