Chart of the Day - Monday, January 22, 2024

January 22, 2024

The S&P 500 closed at an all-time high last Friday while the Russell 2000 Small Cap Index was still in a 20.4% drawdown. That's the largest Russell 2000 drawdown we've ever seen with the S&P 500 at an all-time high.

What happened following the 3 previous largest Russell 2000… pic.twitter.com/9Q2LYOUegc
— Charlie Bilello (@charliebilello) January 22, 2024

🏆 Today’s Chart of the Day was shared by Charlie Bilello (@charliebilello).

While the S&P 500 closed at record highs last week, The Russell 2000 closed in bear market territory (-20.4%).

Since its inception in 1987, The Russell 2000 has never experienced such a severe drawdown while the S&P 500 was at a record high. This sounds bearish, but history suggests otherwise.

Looking at the three prior extremes, Charlie points out that both indices were higher over the next year, with the Russell 2000 outperforming the S&P 500 and joining it at all-time highs. The following stats were included:
- 1.) April 7, 1999 (-19.2% R2k Drawdown): S&P 500 gained 14.3% over the next year and R2k gained 36.5%.
- 2.) February 13, 1991 (-13.5% 2k Drawdown): S&P 500 gained 12.1% over the next year and R2k gained 35.5%.
- 3.) January 21, 1985 (-13.3% R2k Drawdown): S&P 500 gained 17.4% over the next year and R2k gained 18.2%.