All The Small Things
Small-Cap Sector Review
Defensive Super Sectors
All defensive small-cap sectors are trading below a downward sloping 200-day moving average. The primary trend is down.
Healthcare and Utilities printed new 52-week lows this Fall. Both sectors are trading at multi-year relative lows versus the S&P Small-Cap 600 Index.
Consumer Staples on the other hand is holding up quite well on both an absolute and relative basis. What’s working inside Consumer Staples? Well, in 2023 it’s household products - the sector’s sole industry group with a positive year-to-date return.
Cyclical Super Sectors
All cyclical small-cap sectors are trading below a downward sloping 200-day moving average. The primary trend is down.
Materials and Consumer Discretionary are the most constructive. Both sectors are trading above their respective 2022 lows. The Materials sector is comprised of >40% Metals & Mining stocks. This industry group is the only positive contributor year-to-date.
The Small-Cap Financials + Real Estate Sector is trying to find its footing. In 2H 2023 the relative strength chart printed its first “higher low” in nearly 18-months.
Sensitive Super Sectors
Energy and Industrials are trading above an upward sloping 200-day moving average. The trend is up. Technology, although printing new relative highs in June, failed to form new absolute highs. The sector is now trading below a downward sloping 200-day moving average. The trend is down.
The relative strength chart of Small-cap Industrials is the most impressive. We’ve witnessed a remarkable stretch of outperformance. June 2021 marked the low on the relative strength chart. Since then, it’s been all Industrials. The ratio nearly reached +3 standard deviations away from the 2-year average. What an incredible move.
That’s enough out of me.
SM