Despite bursts of outperformance, small- and mid-cap stocks (SMID) have underperformed large-caps year to date -- as they have over the past six years. But they may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the trade and tariff debate, fallout from unrest in the Middle East, the Russian invasion of Ukraine, issues in China, or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps, with the P/E ratio on the Russell 2000 SmallCap Index at 20, compared to a trailing P/E of 29 for the S&P 500. Finally, there are long stretches in the record books when SMID stocks have outperformed large-caps. SMID risks do carry risk, but diversified investors look to have exposure to small- and mid-caps based on the long-term performance record.

Aptiv plc manufactures and sells vehicle components worldwide. In connection with the planned spin-off of the Electrical Distribution Systems business (now known as Versigent), Aptiv has changed the name of its Advanced Safety and User Experience segment to Intelligent Systems, and its Engineered Components Group segment to Engineered Components. The company has approximately 141,000 employees. The shares are a component of the S&P 500.

Stocks are lower across the board at midday on Wednesday. Earnings are pouring in and moving individual stock prices. Meanwhile, the ADP private payrolls report came in lower than expected, while the January jobs report originally due for release on Friday will be delayed due to the now-ended partial government shutdown.

The price chart for the iShares 20+ Year Treasury Bond ETF (TLT) remains in a short-term bearish channel off the peak since late October. Price also remains stuck in a range between $83.30 and $94.96 from back in October 2024. At its recent low, TLT has retraced almost 61.8% of its rally from May to October. Volume for more than two months has been heavier during down days, a sign of distribution. Daily momentum continues to be negative, but has flattened in recent weeks. Interestingly, the daily Bollinger Bands are very tight, suggesting a decent move is coming. Unfortunately, with so many mixed signals, the direction is unknown and the probability of predicting the correct direction is low. The SPDR Gold Shares (GLD) ETF has rallied back to all-time highs (ATHs) and volume often has been heavier during advancing days. Still, there was a bearish reversal with fairly heavy volume on December 29. Sometimes, these heavy-volume one-day reversals can foreshadow trouble ahead. The daily moving-average convergence/divergence (MACD) has traced out a massive bearish divergence on the latest run to ATHs. That could be a reason to worry. In addition, the U.S. Dollar Index has turned higher and appears to be tracing out a bullish base (although the greenback is certainly taking its time). Key trendline support for GLD is near $401, which is also the location of the 21-day exponential moving average (EMA). The rising 50-day EMA is at $390 and also offers important support. The IShares Silver Trust (SLV) is again in a parabolic advance, but has seen some whippy action since late December. (Mark Arbeter, CMT)