In bull markets, laggards tend to catch up to the leaders.
We’ve already seen rotation into homebuilders, banks — even biotechs are starting to wake up.
But what’s the story when we move down the cap scale?
It’s been a large-cap world for most of the past five years.
SMIDs just haven’t been able to hold onto leadership in any sustainable way. But that might finally be changing…
There’s something brewing beneath the surface in the smaller names — and it wouldn’t be crazy to think it is their time to shine.
In fact, it would be a healthy, constructive development for this bull market.
It would speak to real breadth expansion.
Take a look at the ratio chart of Micro-Caps $IWC vs Mega-Caps $DJI:
A couple of months ago, this ratio broke down sharply — slicing through a critical support level.
But those new lows didn’t stick. Buyers stepped in and reclaimed the polarity zone almost immediately, turning this breakdown into a potential failed move.
And this wasn’t just any support zone — we’re talking about the 2020 lows, the exact level where micro-caps began their last major run of outperformance.
If there’s a time and place for this rotation to happen again… this is it.
We’re already seeing signs of strength across lagging sectors. Now, with small and micro-caps starting to show relative improvement, we could be witnessing the next phase of leadership broadening out.
Under that scenario, we should be looking to add exposure down the market-cap scale.
We run a scan called Minors Leaguers that spots high-performing $1B–$4B small-caps near new highs — potential future large-caps with 5–10x upside.
It’s published every two weeks for ASC Premium members.
