Small but mighty

In the world of small sample sizes, small-cap stocks stand alone. Their move over the past 2 months has been historic. The Russell 2000 closed at a new high with a week left in the year, which it's only done twice before. Both saw minor gains over the next few days, then losses during the next month. If it continues that pattern, then it will record its 8th consecutive week with a 1% or larger gain, which has been matched only once before, in early December 1992. That, too, saw minor short-term gains then modest losses over the next couple of weeks. The IWM fund saw a narrow range-day while closing at a multi-year high on Wednesday, which has a much larger sample size. But out of the 71 times this triggered, it saw gains over the next few days 64% of the time, but only 42% of the time, with a -0.5% median return, during the next 2 weeks. The overall suggestion is there is still a holiday-infused tailwind but it turns into a headwind as we start the New Year.