We are now one full trading week into 2019 and things have definitely picked up from where we had left off in 2018. Each of the major index ETFs are finally in the green on a YTD basis. In addition, after starting off the year at extremely oversold levels from the Christmas Eve bottom, the recent rally has lifted all of these ETFs out of oversold and firmly into neutral territory. Each one is also within 3% of their respective 50-DMAs which going forward could potentially be a key point of resistance from a technical perspective.
The heavily battered small caps in 2018 have taken a 180-degree turn this year as well. They caught a bid in the new year and are the biggest gainers of the major indices thus far. Conversely, large-cap focused ETFs have been relative laggards. This new year rotation has led the Microcap ETF (IWC) to rocket ahead of its peers with gains more than double the S&P 500 (SPY) and triple the Dow (DIA). DIA, while still positive, has been the worst performer with a gain of just over 2%.