Will Small-Caps Bring (Once Again) Wall Street Down ?

Wall Street Opens After Major Rebound On Previous Day

Small-Cap profit margins are falling, and, as most traders know, this is usually the sign that something big is about to happen (spoiler: something bad is happening here)


A quick comparison between Small-Cap and Large-Cap profit margins may look quite scary:

UBS profit margins

Go back in time and you’ll find out that small-cap margin started declining in 2006, while large-caps followed more than one year later.

In 2000 the opposite thing happened, but what seems to matter is that it is unnatural for margins to move in a divergent direction as they are doing now.

Get ready for an adjustment in this graph.


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