Small-cap stocks are wobbling, and that could mean trouble ahead for the broader market. The Russell 2000 is barely above the flatline for 2023, gaining just 1.4% in that time. The small-cap index is also down more than 10% from a 52-week high. That decline put the benchmark near its 200-day moving average, indicating "very weak" overall and a potentially downside break, BTIG said in a note. By comparison, the large-cap S & P 500 and Nasdaq Composite are up 12.
And so I think we might have 5% to 10% to go before that oversold condition develops," Ginsberg said. Attractive valuation not enough? There's another source of concern regarding small-caps. Jefferies small- and mid-cap strategist Steven DeSanctis noted that the group hasn't been able to recover despite its attractive valuation. "When I look at valuations, we're back to levels that we haven't seen since February of 2002.