Mid And Small Cap Stocks Diverge At Highs As Emerging Market Volatility Soars

This is an abridged version of our Daily Report.

About those new highs

Mid and Small Cap indexes are hitting new 52-week highs, leading the Large Cap S&P 500 index as we saw on Tuesday. But fewer of those mid- and small-cap stocks in the indexes are also reaching 52-week highs.

Similar divergences led to weak 1-3 months returns, but strong 6-month ones.

Volatility strikes emerging currencies

Volatility on emerging market currencies is at a multi-year high relative to G7 currencies. That has led to periods of outperformance of emerging stocks relative to the worldv.

Getting extreme

Our proxy for the CNN Fear Greed model has climbed above 80. According to the Backtest Engine, that has led to a negative average next-day return that amounts to an annualized -4.9%. If it gets above 85, that drops to an annualized -11.8% and above 90, it declines to a putrid -36.5%.

Still leaving

According to the Investment Company Institute, investors pulled more than $3 billion from equity mutual funds and ETFs at the end of July.

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The post titled Mid And Small Cap Stocks Diverge At Highs As Emerging Market Volatility Soars was originally published as on SentimenTrader.com on 2018-08-09.

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