On January 7th, I wrote about The Great Broadening.

The idea was simple: the baton was finally being passed from the Mag 7 to the other 493 stocks in the S&P 500.

That post focused on large caps.

What I failed to show you was the smalls.

And shame on me because when you look at what small caps are doing right now, it more than warrants a chart from me.

The price action is incredible.

Let me show you.

Below you’re looking at two ratios:

I want you to first focus on the top panel.

See that breakdown in the Mag 7 relative to the S&P 500?

Those are the past market leaders rolling over relative to the broader large cap space.

But the bottom panel is the real money shot.

That is a clean breakout in small caps relative to large caps.

And it has my attention.

A quick aside on how I think about markets. I was going to scrap this because I don’t know if anyone cares, but I’ll leave it on the off chance it resonates with someone.

Whenever I attempt the impossible mental task of predicting what sectors or stocks might work over the next 12 months, I never try to look forward.

Instead, I try to mentally place myself one year in the future and imagine I’m looking backwards at what happened over the past 12 months.

I try to imagine the conversations that investors will be having about the sectors, sizes, and geographies that worked in 2026.

Is it plausible that in 2027 we look back and say, “wow, 2026 was the year small caps finally had their moment.”

That feels reasonable to me.

A year from now, could I envision a world in which investors are finally talking about the large cap rubber band snapping, relative to smalls, even if for a brief 12 month moment in time?

I definitely see that as a possibility.

I could keep going, but you I’ll stop. You get my point.

Those are my thoughts on the small cap matter.

What I’m most excited about is hearing Josh and Michael’s thoughts today at 5PM ET on What Are Your Thoughts?

My research partner in crime Sean Russo also made a chart to supplement the conversation on small caps vs large and it’s a banger. Hope you are excited as I am for the show!

PS: I keep a tab open of the live show before it starts so I get the full live experience. I want to be there from the rip. Can you blame me? Been doing it since college. Some things never change. Join me in the waiting room now 🙂

That’s all for today. Thank you, as always, for reading!