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Time For Mid-Cap Stocks To Outperform?

Published 01/09/2019, 01:42 PM
Updated 07/09/2023, 06:31 AM
US500
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SPY
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MDY
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Mid-cap stocks have been underperforming large-cap stocks for quite some time. Perhaps, this is a reason for the malaise in the broader market over the past year.

Let’s take a closer look at what’s happening. In the chart below, we look at the performance ratio of mid-cap stocks to large-cap stocks, using the S&P Mid Cap ETF (NYSE:MDY) and the S&P 500 (NYSE:SPY).

As you can see, it’s been trading in a longer-term channel and hit upside resistance in late 2016/early 2017 at (1). And it has been heading lower ever since.

The decline is currently testing 8-year support (2) with momentum levels oversold and potentially creating a higher low. Mid-caps have rallied from these momentum levels in the past (see green markers).

A setup is in play for mid-cap stocks to outperform large-cap stocks. Stay tuned.

Mid-Cap Stocks/Large-Cap Stocks Ratio

SPDR S&P MidCap 400 Vs. SPDR S&P 500

Latest comments

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I'm in, long and strong.  Thanks for sharing.
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