Small cap stocks took it on the chin last week with the Russell 2000 (RUT) losing just over 5% on the week which places the small cap benchmark at down 6.73% for 2015.  In the large cap space the Russell 1000 (RUI) lost 3.85% last week which caused this large cap benchmark to move into the red for 2015.  RUI is now down 2.6% for 2015.


Before moving to the volatility indexes I want to address where we are in December with respect to RUT and RUI.  A couple of weeks ago I noted that December is usually a good month for both RUI and RUT.  I also noted that RUT has a better than average chance of outperforming RUI in December.  Well two weeks into December and neither of these things are coming true.  RUT is down 6.22% and RUI is down 3.47% so far this month.  Not only is RUT down, but it is trailing RUI by a pretty wide margin.  December started in the red for both indexes last year as well.  As of the second Friday of the month RUI was down 3.22% and RUT was down 1.75% for the month as of December 12th last year.  I knew stocks started weak in December, but moved higher to finish the year after the first couple of weeks in December.  However, after the first couple of weeks in December, both RUI and RUT moved higher, but there was very little outperformance from RUT relative to RUI from December 12th to December 31st.  As always we will see, but this month’s early under performance by RUT relative to RUI may be too much to overcome this year.


In the volatility index space RVX closed at a discount to VIX to close out the week.  We made a big deal out of this when it happened early this year.  This may be a new norm when we get into a high volatility environment.  I did want to note that the first day RVX moved lower than VIX in 2015 was on August 24th when the Russell 2000 closed at 1111.69.  I like being able to report that five days after RVX closed below VIX RUT was up by over 4%.  Next weekend I’ll let you know if that pattern repeated.