Small-Cap profit margins are falling, and, as most traders know, this is usually the sign that something big is about to happen (spoiler: something bad is happening here)
A quick comparison between Small-Cap and Large-Cap profit margins may look quite scary:
Go back in time and you’ll find out that small-cap margin started declining in 2006, while large-caps followed more than one year later.
In 2000 the opposite thing happened, but what seems to matter is that it is unnatural for margins to move in a divergent direction as they are doing now.
Get ready for an adjustment in this graph.
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