As I've covered many times here (1, 2, 3, 4, 5), the idea that large caps will continue to outperform small caps after the earnings season is based on a very large assumption.  Without rising volatility or a continuation of large M&A and buyback, it's only a matter of time before small caps hit par YTD with large caps.

    The following is a graph that demonstrates the difference in return over the past month between the Russell 2000 tracker IWM and the S&P 500 tracker SPY.  Notice how, in general, as volatility falls, the Russell's gains are above the S&P's.  This is especially easy to see in weeks like this one, where the VIX makes clear changes in direction.

    YTD, IWM is less than half a percent below SPY for return.  When the large-caps-of-the-90's discussion began, IWM was approximately 2.5% below SPY.  Where's all the discussion gone now?