Market Moves

The most popularly traded stock among all issues, as measured by the total value of shares traded, is the S&P 500-tethered exchange-traded fund (ETF) managed by State Street Global Advisors, the SPDR S&P 500 ETF (SPY). By this measure, no other stock or ETF comes anywhere close, with the nearest issue being shares of Apple Inc. (AAPL), which today traded on less than one-third of the money that SPY shares move through the market. 

The S&P 500 index itself is tracked with the symbol SPX and is not directly traded, but SPY shares maintain a close resemblance to the index for the most part. That makes today's trading anomaly all the more interesting. SPY reached a new all-time high briefly during the session, while the index is still several points away from reaching its own high-water mark. What accounts for this difference may simply be the direct access provided to traders by SPY. Investors appear eager to participate in a market reaching all-time highs.

Aside from the implication of continuing bullish sentiment, the ramifications of this investor-driven activity are not inconsequential. It may be that index funds are on the verge of leading individual stocks and not the other way around.

Chart showing the performance of the S&P 500 ETF (SPY)

Micro Caps Surge Since September's Start

Meanwhile, the markets have shown a complete inversion of asset performance just since the beginning of the month. Whereas previously larger-cap stocks outperformed mid-cap stocks, which in turn outperformed small-cap and micro-cap stocks over a two-week period, this order is now reversed.

Micro caps are now outperforming small cap stocks, and small cap stocks are, unsurprisingly, outperforming mid and large-cap stocks. This indicates that investors are accepting more risk-based assets. They seem to be buying into the notion that they should more aggressively pursue higher returns in a market that seems poised to move higher still. Such behavior is a typically bullish sentiment, but the rapid reversal of performance in these assets is nonetheless eye-catching.

Chart showing the performance of indexes related to market caps

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Chef's Warehouse Breaking to New Highs

Among stocks pushing the micro-cap index higher are stocks of two companies in the food distribution industry, The Chef's Warehouse, Inc. (CHEF) and Core-Mark Holding Company, Inc. (CORE). While other larger companies in this industry, such as Sysco Corporation (SYY), are also faring well, the impact of these two stocks on the iShares Micro Cap ETF (IWC) is significant and likely to remain so.

The more potent of these two issues right now is Chef's Warehouse. These shares have doubled over the past 18 months, and based on recent chart patterns, they appear to have broken a longer-term resistance level and are poised to continue higher. Chef's Warehouse shares are one of the top ten holdings in the IWC fund. 

Chart showing the performance of numerous food-related micro caps

The Bottom Line

Markets moved to nearly historic highs. The popular ETF with ticker symbol SPY seems to have made a new high, perhaps in anticipation that the S&P 500 index itself will yet do so; however, today it did not. More risky stocks are taking the stage, in particular micro-cap stocks such as Chef's Warehouse and Core-Mark, as investors rush to pursue more bullish strategies.

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