Why Small Caps Have Become Unglued

The video discusses the recent divergence between small and large cap stocks, focusing on the S&P 600 and S&P 500 indices. It highlights that only 40% of small caps are in an uptrend compared to 70% of large caps, a divergence not seen in 20 years. The video suggests a simple investment strategy: screening small cap stocks that are down 25% but have earnings up 25%, with no sell ratings. Four stocks meeting these criteria are mentioned. The video concludes by discussing potential opportunities as small caps may rally.

What recent trend has been observed between the S&P 600 and S&P 500 indices?

• Both indices are moving in the same direction.

• Small caps are outperforming large caps.

• Large caps are outperforming small caps.

• Both indices are declining.

What is the suggested simple strategy for dealing with the divergence between small and large caps?

• Avoid investing in small caps altogether.

• Focus on small cap stocks with specific growth criteria.

• Invest only in large cap stocks.

• Invest in both small and large caps equally.

Which of the following is NOT a criterion for selecting small cap stocks in the video?

• Stocks with earnings up 25%.

• Stocks with a high number of sell ratings.

• Stocks with no sell ratings.

• Stocks down 25% in price.

Which stock is mentioned as having a humorous connection to the small cap trend?

• Checkpoint

• Christopher and Banks

• Lazy Boy

• First Bank of Puerto Rico

What is the potential opportunity mentioned for small caps?

• They may continue to decline.

• They will outperform large caps significantly.

• They may rally and close the gap with large caps.

• They will remain stagnant.