Mark Hulbert: This bullish indicator has investors feeling bearish

Might recent small-cap weakness actually be a good thing? Not that any of the dozens of advisers I monitor think it is. On the contrary, a number of them are worried by the sector’s marked weakness.

Over the past three months, they pointed out, the large-cap dominated S&P 500 SPX, -0.13% has done more than five percentage points better — 6.4% versus 1.3% — than the Russell 2000 RUT, +0.40% , perhaps the most widely-followed small-cap benchmark. Earlier this week, in fact, the Russell 2000 briefly dipped into negative territory for year-to-date performance.

Why is this worrisome? When trying to answer this crucial question, advisers provide lots of anecdotal evidence and repeat vacuous sayings.

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