Since October bottom, some stocks have done better than others

In early October, markets were looking a bit grim. Interest rates were rising. There was talk they might stay high — maybe not forever but for a long time. 

And stocks were falling. But stocks were just getting primed for a big-time fall rally. The first signal came on Oct. 23 when the 10-year Treasury yield hit 5.022% and then fell back by day's end.  

Within a few trading days, the Standard & Poor's 500 Index  (^IN) - Get Free Report hit a short-term bottom at 4,104, then picked up 10 points by the close. The trigger had been pulled. 

So in fits and spurts, a rally erupted, especially after the Federal Reserve signalled it likes where inflation is going (down) and can think about cutting interest rates. (Markets see the first cuts in the spring of 2024.) 

The rally has now spread across the entire U.S. stock market, pulling up the downtrodden universe of small- and mid-cap stocks. 

In fact, the Russell 2000 Index and S&P 600 Index have out-performed the major indexes that everyone follows. And ETFs associated with them have done better as well. 

Related: With the Fed ready to ease, will stocks continue to rally in 2024?

Here are the numbers based on lows seen either on Oct. 26 or Oct. 27 and as of the Dec. 15 close. 

• Russell 2000 Index ^RUT : up 21.5%. The iShares Russell 2000 exchange-traded fund  (IWM) - Get Free Report, up 21.9%.
• The S&P 600 Index ^SML: up 21.2%. The  SPDR Portfolio S&P 600 Small Cap ETF  (SPSM) - Get Free Report: up 21.6%.
• S&P 400 Index ^SP400: up 18.2%. SPDR S&P Midcap 400 ETF  (MDY) - Get Free Report: up 17.8%.
• S&P 500: up 15%. SPDR S&P 500 ETF SPY: up 14.7%.  
• Dow Jones Industrial Average  (^DJI) - Get Free Report: up 13.4%. SPDR Dow Jones Industrial Average ETF  (DIA) - Get Free Report up 15.3%.
• Nasdaq Composite Index  (^COMPX) - Get Free Report: up 18.1%. Fidelity Nasdaq Composite Index ETF  (^ONEQ.SO) - Get Free Report, up 18.3%.
• Nasdaq-100 index  (^NDX) - Get Free Report: Up 18.2%. Invesco QQQ ETF  (QQQ) - Get Free Report, 18.4%.

Admittedly, the Nasdaq-100 has had a great year, up 52% with just nine trading days to go. But remember: This is a rebound gain. The index fell 33% in 2022 in the midst of the worst year for stocks since the 2008 financial crisis. 

The recent gains for the small- and-mid caps have been bigger than the large-cap indexes and funds in large part because Smart Money could smell bargains in that world. All thanks to armies of people attached to computers that could hit buy buttons at a moment's notice.

Consider the seven so-called Magnificent Seven stocks are up an average of 19% in this time frame — very healthy gains. The bigger gainer in this time frame: Amazon  (AMZN) - Get Free Report, up 26.7%.

The other Magnificent Seven stocks are Apple  (AAPL) - Get Free Report, Google-parent Alphabet  (GOOG) - Get Free Report, Meta Platforms  (META) - Get Free Report, Microsoft  (MSFT) - Get Free Report, Nvidia  (NVDA) - Get Free Report and Tesla  (TSLA) - Get Free Report. Alphabet is the laggard right now, up JUST 10.3%.

The top 5 Russell 2000 stocks are up an average 158%. Among the leaders: ALX Oncology  (ALXO) - Get Free Report, up 106%. The top 5 S&P 600 stocks are up an average 48%. The top five S&P 400 stocks have enjoyed average gains of 63%, led by AMC Networks  (AMCX) - Get Free Report, up 85.5%.

Related: What falling interest rates mean for investing in bonds and CDs

Big stocks now looking vulnerable

In addition to the bargains that Smart Money beheld, the big caps have looked increasingly pricey of late, pushing the Dow, for example, to record highs and the S&P 500, Nasdaq and Nasdaq-100 indexes to 52-week highs. 

So expensive have many of these stocks become that there are worries they are becoming vulnerable to selling bouts. 

Microsoft, in fact, hit a 52-week closing high of $382.70 on Nov. 28 and is off 3.1% since.

The Russell 2000, by contrast, finished this past week still down 1.2% below its 52-week high and is still 19.3% below its all-time high in November 2021.