By Ian WyattNEW YORK ( TheStreet) -- Did you know that just three trading days ago, on Jan. 19, the Russell Small Cap Index was within 6 percentage points of its all-time high of 855? Surprised? I would think so. Given the severity of the recent recession, it seems that stocks have defied gravity to roar back to such lofty levels. Take a look at the five-year chart below and you'll see what this rally looks like in a historical perspective. A quick look at this chart, and the perspective that small cap stocks were so close to breaking out to an all-time high, might make you think that stocks are wildly overvalued. The market certainly thinks so, as small-caps have fallen 4.3% over the last three sessions. In fact in some cases stocks are wildly overvalued, and to be perfectly honest I wouldn't rush out to buy an ETF right now that tracks any of the major indices. Chances are this will be dead money, and the risk-return potential doesn't justify that type of investment right now.
"My outlook is that individual stocks will decouple from the major indices and will start to move on more stock and industry specific news. I believe that the broad market will become increasingly volatile as this decoupling happens, and that index investors will not see much difference in the value of their holdings."I think this de-coupling will go on for the next few months, so there is no huge rush to try and rebalance your portfolio all at once. A couple of tips to help you get started: