The average market cap of every company that makes up the Russell 2000 is roughly $1.3 billion. The recent selloff largely represents a flight away from high-risk and speculative stocks.
Take a look at the chart below. It perfectly illustrates the dynamics at work within the stock market right now. This year, the S&P 500 has remained mostly flat while the Russell 2000 has continued to crater:
? John Kicklighter (@johnkicklighter) May. 15 at 01:22 PM
2. Bonds have become some of the best performing asset classes of the year. Treasuries, in particular, have been melting upward.
Today, a closely followed and discussed ETF, the iShares 20+ Year Treasury Bond (TLT) climbed to its highest level since June, 2013. It's now up 12% year-to-date. That's a much better performance than any of the major equity indexes:
? Aaron Jackson (@a_jackson) May. 15 at 02:06 PM
For the rest of the summer, market participants will be deeply focused on small caps and treasury bonds. Together, they are shaping this year's market.