The S&P 500 Cap-Weighted Index ((IVV))  has been on a slow, stubborn march forward for much of the year before breaking through the 50-day moving average on its way to support at the 1900 level. The S&P 500 is up 5.71% for the year after making a new all-time high just two weeks ago. Is the 1860 level the next stop? Or are we bouncing back to a new all-time level at 2000?

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 out-performance versus the cap-weighted index in the last decade. The index is up 6.30% year-to-date, curiously better than the cap-weighted index, given that small-caps have underperformed.

One of the themes for the past few years has been growth-oriented, smaller cap stocks outperforming  high quality, blue chip stocks. Despite a correction that brought  the market down to its 50-week moving average, the trend has stayed in tact…so far. On a shorter-term basis, the Russell 2000 Small Cap Index ((IWM)) is down 2.05% YTD, compared to the almost 6% gain for the S&P 500. After years of investors disregarding risk aversion in favor of returns, this index is finally took a beating. Low quality or speculative smaller-cap stocks tend to lead the market near the end of a bull phase. We’ll keep an eye on this.

The S&P 500 versus the Russell 2000 Index. The Large Cap Index has outperformed for much of the past six months.

Unlike the US markets, the MSCI EAFE Index ((EFA)) has staggered and stumbled throughout the year, and now finds itself below both moving averages.  The index is down 0.31% since the beginning of the year, significantly behind its US counterpart.

The MSCI EAFE Small Cap ((SCZ)) has performed significantly worse, with a YTD loss of 0.93%. On par with the US markets, in the short-term international small caps are underperforming the the large cap index.

EAFE Large Cap Index vs EAFE Small Cap Index. It’s been a steady large cap outperformance, although both indices have been weak.