All of a sudden, it seems that investors are thinking small.
The small-cap Russell 2000 index has crushed the S&P 500 over the past month, rising 1.75 percent while the large-cap S&P is up less than 0.2 percent. And traders see both fundamental and technical reasons for the trend to continue.
"It's as simple as this: It's growth versus value," said David Seaburg, head of equity sales trading at Cowen. "If you look at growth [stocks], growth is up roughly 7 percent more than value this year. Why? It's because rates are going to go higher and people are sort of staying away from these dividend names."
In other words, stocks that pay high dividends and thus trade a bit like bonds are more vulnerable to expectations of rising rates than stocks that are prized for their growth potential. Since more of the Russell components are growth stocks and more S&P stocks are big dividend-payers, a shift in market preference toward growth helps the Russell in comparison.