The Russell is close to a 10 percent correction, but the S&P 500 has held up well. The big question last week was, will the decline in the Russell infect the large-cap S&P 500?
Paul Hickey at Bespoke Investment gives some historical perspective. He notes that there have been 15 other periods where the Russell 2000 fell 5 percent or more over a 50-trading day period, and the S&P 500 was up over that same span.
The result: "...while there is a large number of people out there who think the Russell breakdown is a sign of things to come for the S&P 500, most of the time it isn't," Hickey says.
Here are the average results for the Russell vs. the S&P 500 three and six months after the 5 percent or more drop in the Russell, courtesy of Bespoke:
3 months 6 months
Russell 2000 up 6.1 percent up 8.7 percent
S&P 500 up 4.4 percent up 7.8 percent
The bottom line: in the 15 times this has happened in the past, the Russell 2000 has outperformed the S&P 500 in the following three and six month period.
1) Initial Public Offerings are back on the table. The market is getting Chinese IPOs through the door, and one U.S. tech offering. Alibaba is some time away, but with a slight thaw in IPOs last week, issuers are wasting no time getting deals through.
On Friday, Jumei International Holding, China's largest retailer of beauty products, set its terms. They are seeing to raise 9.5 million shares at $19.50—$21.50. They are set to price Thursday night for trading Friday.
Two of the more interesting U.S.-based companies seeking to go public this week include:
a. Zendesk (ZEN), a San Francisco-based company which provides a customer service platform for companies. They are seeking to raised 11.1 million shares at $8—$10, pricing Wednesday night for Thursday trading. This will be a test for tech IPOs.
b. TrueCar (TRUE), a Santa-Monica based company that runs a website allowing users to obtain market-based pricing data on new and used cars, is seeking to raise 7.8 million shares at $12—$14, pricing Thursday night for Friday trading.
2) We start the week with the at an historic high.
Chinese stocks had a two percent pop on speculation authorities would open up more of the domestic stock market to foreign investors.
India popped another 2.5 percent to close at yet another historic high, as the national elections have finally concluded. It appears pro-market proponent Narendra Modi is ahead in initial opinion polls, with final results due May 16th.
--By CNBC's Bob Pisani