The S&P 500 Cap-Weighted Index ((IVV))  has been on a tear this year, breaking through any and all resistance on its way through the 1700 level, despite the fact that the market fundamentals are not as strong as a market at all-time highs would suggest. Well, it seems that reality is starting to hit. With the government at an impasse (again), the S&P 500 has fallen just under 40 points since hitting all-time highs in the middle of September, and with what looks to be a rough coming morning, seems poised to retest the 50-day moving average at the 1680 level. The S&P 500 is still up an outstanding 20.41% for all of 2013.

The S&P 500 Equal-Weighted index ((RSP)) is set up so that every stock in the index has the same weight, thereby eliminating market-weighting’s growth bias. As a result, the index tilts more towards mid-cap and value stocks, which accounts for much of the out-performance versus the cap-weighted index this year and in the last decade. Since breaking resistance at the 65 level and hitting new all-time highs back in early September, the index has come back down to earth, and now looks likely to test support at the 65 level and the 50-day MA. The index is up 23.97% year-to-date, significantly better than the cap-weighted index.

As evidenced by the out-performance of the S&P Equal-Weighted Index, one of the themes for the past few years has been growth-oriented, smaller cap stocks outperforming  high quality, blue chip stocks. That trend is also seen in the performance of the S&P Mid Cap 400 Index ((IJH)), as the index is up 23.35% YTD.

The Russell 2000 Small Cap Index ((IWM)) is the best performing major domestic index, up 27.65% for the year. This might not be all peaches and cream though, as this maybe a sign that people are disregarding risk aversion in favor of returns. Low quality or speculative smaller-cap stocks tend to lead the market near the end of a bull phase. Nonetheless, the index has held up better technically than the overall market.

The MSCI EAFE Index ((EFA)) is lagging behind the US stock market, given the well-known and widely-reported circumstances in Europe, the currency problems in commodity-centric economies of Australasia, and stunted growth in Japan. But since July, the index has been on a tear and easily outperforming the US stock market. It finds itself solidly above its 50-day moving average and in a nice uptrend. It’s up a healthy 15.28% year-to-date.

The MSCI EAFE Small Cap ((SCZ)) has performed significantly better, with a YTD return of 20.94%