Chart of the Day - Monday, December 9, 2024

🏆 Today's Chart of the Day was shared in a note by Jeff Hirsch (@AlmanacTrader). 
 

• The Russell 2000 ($IWM) failed to make an all-time high last week as Mega-Caps dominated the tape. However, Jeff reminds us that Small Caps are still tracking their seasonal pattern eerily closely. 
   
• After bottoming in late October, the ratio of Small Caps to Large Caps ($IWM/$IWB) typically makes two higher lows before a solid push higher from mid-December through March. 
   
• In the note, Jeff explained: "We suspect that once tax-loss selling pressure abates, likely sometime later next week, $IWM will finally break out and close at a new all-time high. Should this occur, Small-Cap outperformance could persist into early March next year."
   

The Takeaway: Small-Caps erased their post-election alpha last week as Mega-Caps dominated the tape, but history suggests we could see sustained outperformance from Small Caps in the weeks/months ahead.