Monday, June 9, 2014

SPX versus R2K: where are the smartasses now?

Here's SPX versus R2K:

Does R2K always outperform SPY in times of economic strength?

Well, people quit worrying and learned to love the US economy in late 2012; after that, the chart shows that R2K outperformed SPY.

Until, of course, the great internal rotation of 2014 occurred this spring. You remember, that was when everyone was freaking out and calling a top in the S&P - or even worse, calling it a bubble that was about to pop as leadership narrowed.

Since May, though, R2K has moved right back to outperforming SPX.

This chart seems to show that, if 2013 was a justified trend, a correction back to trend by IWM will need to outperform SPX by a good 10% just to get back to where it was.

Would you buy that?

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