By Andy Hyer
One of the simplest ways to determine the relative strength of small caps versus large caps is to use the SmartChart function to divide the iShares Russell 2000 ETF (IWM) (or another small cap ETF or index) by SPX. As shown below, large caps generally had the better relative strength in 2014 and 2015, as reflected by the declining RS chart, but it has been a different story in 2016. We have seen a series of higher highs and higher lows on the relative strength chart in 2016 as small cap indexes like the Russell 2000 have generally performed better than large caps.
(click to enlarge)
Small cap momentum, however, had a slow start in the first half of the year, generally underperforming cap weighted small cap indexes like the Russell 2000. However, it looks like that may be changing. Our PowerShares DWA Small Cap Momentum ETF… Read More …