70 days ago • Posted by Martin Boujol
Stocks might have overdone it a little
There are a few indications on why the equity market might have rallied a little too far. Firstly, the relative strength indexes of small and midcap companies have showed higher than usual levels, which historically meant a return under 1% for the coming 6 months. Secondly, the market cap seems to always be corrected by the GDP when this one does not follow the surge. Today, this ratio is at an all time high. The question is : will it fall and when?
Source: J.P. Morgan Small Market Cap Strategist