LPL Research Market Signals Podcast

Optimism Is Out There

LPL Research

The focus is back on investing fundamentals. Stocks are showing rotation from growth to value, and small caps are showing more strength. Q3 earnings delivered a huge upside surprise. Positive COVID-19 vaccine news underscores it all.

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Excitement over vaccine progress and extremely strong earnings pushed stocks higher last week in spite of record new COVID-19 cases and hospitalizations.

Small caps make new highs

It took more than two years, but small caps finally made new all-time highs, with the Russell 2000 Index closing at its first new high since August 2018. This ended one of the longest streaks ever without a new high. Data shows that future returns after long periods without new highs have been quite strong.

Too excited?

With positive vaccine news and new stock market highs, we are seeing some potential warning signs, such as sentiment getting excited. When we upped our view on stocks in late March 2020, virtually no one was bullish, but now things are a little more crowded. Various flows and sentiment polls are flashing levels of warning, and a well-deserved break after a huge rally in November would be perfectly normal.

Chart - Longest Streaks Without a New High for The Russell 2000 Index

Tune in now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunesGoogle Podcasts, or Spotify and find us on the LPL Research YouTube channel.




This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 


For Public Use — Tracking #: 1-05079357 (11/21)