The S&P 500 cap-weighted index is at a crossroads right now. The index currently sits atop its 50-day Moving Average, with momentum pointing slightly bearish after Friday’s close at the lows of the session. The index has returned 12.61% so far this year.
The S&P 500 equal-weighted index ((RSP)) is set up so that every stock in the index has the same weight, thereby eliminating market-weighting’s growth bias. As a result, the index tilts more towards mid-cap and value stocks, which accounts for much of the outperformance versus the cap-weighted index in the last ten years. The index is up 12.47% YTD.
S&P 500 Growth ((IVW)) vs Value ((IVE)). The S&P 500 Growth Index, which consists primarily of large-cap growth stocks in the tech, healthcare, and energy industries, currently sits atop its 50-day moving average. Its year-to-date performance is 12.17%.
The S&P 500 Value Index, which consists primarily of US large-cap value stocks in the financial services, industrial, and consumer cyclical industries, is below the 50-day MA and its short-term uptrend line. Its YTD performance is 12.86%.
The MSCI EAFE Index has bounced off its 200-day MA, but currently sits below its 50-day and several trend lines that will provide resistance for the index. Its YTD performance is 10.82%.
The MSCI EAFE Small Cap Index is technically sound, as it sits atop its upward trend line and just broke through resistance at the 50-day MA. It has returned 15.45% so far this year.
The Russell 2000 index ((IWM)), a US small cap index, fell below both its 50-day MA and its uptrend line in the last month. If small cap markets lead markets as some tend to say, then the US markets are in store for another run down.
The Russell 2000 Growth Index ((IWO)) looks almost identical technically as that of the underlying index. YTD, the index has returned 13.44%.
While the Russell 2000 Value Index ((IWN)) has returned only 11.62% YTD, technically it looks like its on more solid footing then that of the underlying or growth indices. It recently broke the 40-day MA on the downside, but it has maintained its uptrend line. Historically, the Russell 2000 Value index has outperformed the Growth index by a wide margin.