The Small-cap Stocks Are Getting Overbought
- The 15% rally in the Russell 2000 since very late October has been a fabulous one. However, this small-cap stock index is reaching an overbought condition…which is also true of the regional bank stocks (which are highly weighted in the Russell). This is taking place at the same time the big-cap tech names are showing signs of weakness. If we see further weakness in these tech names…at the same time the small-caps need to work-off their overbought condition…it could lead to some surprising weakness in the broad stock indices over the near-term.