The tactical model has two active parts, size and style, showing wide gaps with Small Caps leading by 5.2% and Value leading by 6.7% year to date.
Here’s the chart:
Let's break down what the chart shows:
The left chart shows the relative price of IWB versus IWM as a black line. A blue line plots the 20-day moving average, and a red line plots the 50-day moving average. Shaded bars along the bottom mark periods when Large Cap is leading, and Small Cap is leading.
The right chart displays the relative price of IUSG versus IUSV as a black line. A blue line plots the 20-day moving average, and a red line plots the 50-day moving average. Shaded bars along the bottom mark periods when Growth is leading, and Value is leading.
The Takeaway: This is one of my simple tactical models. It does not forecast anything. It reacts to price.
Leadership flips when the 20-day average crosses the 50-day average, and it stays there until that relationship breaks. That is the entire rule set.
By those rules, Small Caps have been in control since December 16, 2025. The returns back it up. IWM is up 5.8% year to date. IWB is up just 0.6%. That spread is real. It shows where money has actually gone.
The same pattern is playing out in style. Value has been leading since November 26, 2025. IUSV is up 4.4% year to date. IUSG is down 2.2%. Growth still carries last year’s gains, but buyers are not adding here.
Put the two together and the message is clear.
Small is leading Large. Value is leading Growth.
That combination does not show up when traders want safety. Money is not moving toward Large Caps or Growth. It is rotating inside equities toward areas that lagged last year.
When Small and Value lead together, participation usually widens. More stocks carry the load. Index returns look quiet while the median stock does better. Traders who only watch the headline index miss where leadership is actually showing up.
This model stays where it is until price forces it to change.
Leadership has already moved.
The only question now is whether you are positioned for where it is, or still anchored to where it used to be?
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