There could be some runway for small caps, says BTIG's Krinsky

Market Trends & Analysis - Small caps, represented by the Russell 2000, experienced a breakout in September, reaching new all-time highs, but the S&P 600, a small-cap index with a profitability component, lagged behind [2] - Recently, the S&P 600 has joined the Russell 2000 in its upward movement, nearing its own all-time highs, suggesting a potentially broader and more robust small-cap rally [2] - Small caps are currently at levels similar to those in November 2021, indicating potential for significant upside if the current breakout is sustained [2] - There is observed moderation or relative weakness in some of the MAG 7 stocks, such as Nvidia and Meta [2][3] - The ratio of small caps to MAG 7 is breaking out above a multi-year downtrend that began in 2022-2023, suggesting a possible shift in market leadership [3] Company Performance & Potential Risks - Meta's price is below its 200-day moving average, and the slope of the 200-day moving average is potentially inflecting lower, making it one of the weakest of the MAG 7 stocks [6] - If more MAG 7 stocks exhibit similar weakness, it could pose a greater concern for the overall market [6] Investment Opportunities - The alpha, or excess return, may be found in small caps, even if the S&P 500 continues to grind higher [7] - The current market environment may present a runway for small caps, contingent on continued participation from other market segments [4][5]