Conclusion, Investment Implications, Strategy

Our research suggests that those who overweighted large cap stocks on January 9th per our recommendation on that date, versus small or mid cap  stocks, should consider locking in the 8% of relative outperformance accrued since then as this recent trend of relative performance may be coming to an end. 

We are currently watching another area of the market as a potential new overweight opportunity that could carry into the summer months — but it is not quite there yet.  Asbury Research subscribers should consult the Research Center, or contact us directly, for more detail on what appears to be an emerging new relative performance-related opportunity.

Analysis and Rationale

In the January 9th Keys To This Week report (access requires subscription) we first pointed out favorable conditions for relative outperformance by the S&P 500 versus the S&P 1500, rather than by small cap (S&P 600) or mid cap (S&P 400) stocks.

The chart below shows that, as of today, the iShares S&P 500 (IVV) has since outperformed the iShares S&P 1500 (ITOT) by 8%, actually peaking at 11% of relative outperformance on March 10th.

Relative Performance: S&P 500 vs. S&P 1500 daily since July 2016

During the same period the iShares S&P 600 Small Cap (IJR) and iShares S&P 400 Mid Cap (IJH) ETFs have both underperformed the 1500 (ITOT), by 16% and 10%, respectively.


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