Eoin Treacy's view This month I thought it was particualrly notable that the valuations on the S&P500 are very similar to those for the Russell 1000 and 2000. The Russell 2000 represents smaller cap share s and broke out ot new all-time highs in Janaury. Small caps are generally seen as a lead indicator because they are considered to represent inherent strength among the smaller companie s that form the bedrock of the domestic economy. However it is also nota b le that smaller companies are more sensitive to the cost and availability of credit. Since the central bank has been at pains to increase the supply o f money over the last few years, this might also be seen as an contributor to the outperformance of small caps. The truth probably lies betwen the two.

The Russell 2000 Index continues to extend its breakout and a sustained move below the 200-day MA would be req u ired to question medium-term scope for additional upside.

(Please note: All data quoted above originates in Bloomberg. We realise that some of the data displayed is inaccurate for some indices, particularly where ADRs are included. However, I have endeavoured to remove those indices which were most problematic. We continue to publish these tables because the data is generally accurate and going forward we will continue to weed-out the less reliable data sets as subscribers highlight them for us. The P/Es quoted by Bloomberg are exclusively based on operating earnings.)


Please note - David is away today but returns tomorrow.