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Editor's Note: Below is a brief excerpt from today's edition of Market Edges, our weekly big picture Macro newsletter with investable insights. Click here to learn more about Market Edges.

Why We're Bearish On The Russell 2000 - russell RUT cartoon

"The Russell 2000 is still down -11.8% since then. Don’t just 'buy stocks' in Quad 3 and 4. Buy the right sectors.
–CEO Keith McCullough, Early Look, 5/20/1

Investors who don't have a framework for interpreting macro markets may be scratching their heads wondering why—despite a 20% rally from the December lows in the S&P 500—the Russell 2000 remains a laggard down almost -12% from its August 2018 all-time highs.

After getting completely body-bagged in the Quad 4 (U.S. Growth and Inflation slowing) in Q4 selloff, the Quad 3 (U.S. Growth slowing and Inflation accelerating) pivot has prevented the Russell 2000 from recapturing its prior peak.

From a US Equity perspective, things to think about being short and/or underweight in Quads 3 and 4 are: 

A) HIGH BETA was down another -2.8% last week and is DOWN -5.9% in the last month
B) SMALL CAP was down another -2.7% last week and is DOWN -6.0% in the last month
*Mean performance of Top Quartile vs. Bottom Quartile, SP500 companies 

HIGH BETA and SMALL CAP continue to develop into Bearish @Hedgeye TRADE & TREND Factor Exposures.

Why We're Bearish On The Russell 2000 - style factors

Why We're Bearish On The Russell 2000 - market edges