Small caps have been unloved for a while now. Large speculators have stayed net short $IWM futures through most of 2025, and positioning is still deeply negative.
This isn't bullish or bearish on its own—it's just where the crowd is leaning. Sometimes extreme positioning marks a turning point. Sometimes it just reflects reality catching up to fundamentals.
What matters more: are small caps actually cheap here, or are they cheap for a reason? Positioning tells you about sentiment. Valuation and earnings tell you about opportunity.
This isn't bullish or bearish on its own—it's just where the crowd is leaning. Sometimes extreme positioning marks a turning point. Sometimes it just reflects reality catching up to fundamentals.
What matters more: are small caps actually cheap here, or are they cheap for a reason? Positioning tells you about sentiment. Valuation and earnings tell you about opportunity.