Hey, Y`all,
I'm curious anyone's thoughts to help explain how the Russell 2000 is holding up surprisingly well in a volatile market. It's doing better than the S&P and the Dow. There haven't been rate cuts, nor are we really expecting rate cuts. Futures should show that oil prices are going to go up and this would hurt small cap more than large cap and value stocks. What am I missing?
How is the Russell (RUT) doing so well?
byu/Zestyclose_Panda_886 ininvesting
Posted by Zestyclose_Panda_886
5 Comments
You just noticed the pivot
Oh, that’s because I bought 100 shares of TZA over the weekend expecting it to drop on the closure of the strait news. I’ve since sold them for a loss of $15, so tomorrow it should tank. You’re welcome!
My guess is because small cap has higher energy and industrials allocation and that it’s considered better “value” right now given inflated valuations for S&P.
The rotation out of big tech into small caps during volatile moments to capture upside and write calls. The rotation back into large caps will most likely occur when mid east calms down and interest rates get cut. The IWM will probably take a large hair cut.
Zoom out.