AI spending and advancements have accelerated over the last few years, subsequently giving rise to the “Magnificent Seven," or Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), Amazon.com (AMZN), Meta Platforms (META), and Tesla (TSLA). These megacap stocks have accounted for a disproportionate share of market returns. It’s a major reason the large cap S&P 500 Index (SPX) has outperformed the small cap Russell 2000 Index (RUT) for each of the past five years.

The start of this year, however, has been different. The RUT has gained over 7% so far, compared to just over 2% for the SPX. Even more notably, the RUT outperformed the SPX for each of the first 14 trading days of the year. Last Friday, Jan. 23 was the first day of 2026 that the SPX had a better day than the RUT. In the analysis below, I examine similar streaks to see if the small-cap outperformance tends to persist, or if short- to medium-term mean reversion is more likely.

Win Streaks: RUT vs. SPX

We have RUT data going back to 1988, and the recent 14-day win streak for the RUT vs. the SPX is the second longest on record. The longest streak lasted 16 days and ended in May of 1996. The table below summarizes subsequent RUT returns beginning on the first day the SPX outperformed the RUT, following a RUT win streak of at least eight consecutive trading days.

The data shows the RUT outperformance tends to continue, especially in the short term. In the month following the RUT win streaks, the index averaged a 2.72% return with 79% of the returns positive and most importantly, outperforming the SPX 74% of the time. By six months, the outperformance isn’t present with the RUT basically flat on average and beating the SPX just under half the time.  

The tables below show how the SPX performed after the same RUT win streaks as above. The SPX, like the RUT, outperformed its typical returns in the short term, averaging a one-month gain of 1.49% vs. 0.83% any time. Six months after these streaks, the SPX underperforms big time, averaging a slight loss of -0.36% with 53% of the returns positive. The typical six-month average is 4.98% with 75% of the returns positive.  

Finally, the chart below shows the average performance of the SPX and RUT after these streaks of small-cap outperformance. Both indexes show a lot of momentum immediately after the streaks end with the RUT outperforming. Then right around three months they pull back and become more volatile. Ultimately, both indexes get to negative territory just after five months before ending up near breakeven after six months.

The question becomes whether this sustained small-cap outperformance is an indicator of near-term buying pressure that can push markets higher over the next few months. That would be good but the data above also showed that short-term buying tended to be climactic ending in longer term underperformance.

UnitedHealth Group Inc (NYSE:UNH) stock is eyeing its worst single-day percentage loss since April, last seen down 19.8% to trade at $281.96. The company posted mixed fourth-quarter earnings results, with profits of $2.11 beating estimates by one cent, while revenue of $113.2 billion came in below expectations.

The Centers for Medicare & Medicaid Services proposal to raise Medicare Advantage rates by 0.09% -- far below expectations of a 4-6% increase -- is weighing on shares, as well as UnitedHealth's soft revenue guidance. In response, Piper Sandler lowered its price target to $396 from $417. 

The equity has dropped more than 48% over the last 12 months, and last year was the worst stock on the Dow Jones Industrial Average (DJI). Shares earlier gapped to their lowest level since August, breaking below the supportive the 120-day moving average, which had been containing pullbacks since November.

The security is seeing unusual options activity today, with 480,000 calls and 342,000 puts exchanged so far, which is eight times the volume normally seen at this point. The most popular contract is the January 15, 2027 600-strike call, where new positions are being sold to open.

Short-term options traders have been much more bearish than usual coming into today. This is per UNH's Schaeffer's put/call open interest ratio (SOIR) that sits in the 97th percentile of its annual range.

General Motors Co (NYSE:GM) stock is surging to record highs, last seen up 9.1% at $86.66, after the company's better-than-expected fourth-quarter earnings of $2.51 per share, though revenue of $45.29 billion came in slightly below estimates. The auto name also announced a 20% dividend increase, a $6 billion share repurchase program, and strong 2026 earnings guidance.

GM has been rallying on the charts since its early-April lows, now up 57.8% year-over-year. The shares are pivoting higher after consolidating near the $80 level, breaking above the 20-day moving average's short-term resistance. Should these gains hold, GM will mark its best daily percentage gain since October 2024. 

Options traders are blasting General Motors in response, with 49,000 calls and 30,000 puts exchanged so far – 2.9 times the stock’s average daily volume. The weekly 1/30 85-strike call is the most popular, followed by the 88-strike call in the same series, with new positions being opened at both.

Analysts have yet to chime in on the results, though there is still some room for bull notes. Of the 27 analysts in coverage, 17 carry a "buy" or better rating, eight a tepid "hold," and two a "strong sell." Plus, the 12-month consensus price target of $83.13 is a 4% discount to current levels. 

Corning Inc (NYSE:GLW) shares are up 16.7% to trade at $110.80 at last check, after Meta penned a multiyear fiber-optic supply deal worth up to $6 billion to support U.S. AI data-center expansion. Corning will provide next-generation optical fiber, cable, and connectivity hardware, with plans to ramp manufacturing capacity at its North Carolina facilities.

Trading at fresh record highs, today's pop has GLW on track for its best daily percentage gain since April 2004. Longer term, the 100-day moving average has helped guide the shares higher over the past few months. Year over year, the equity is up 122.7%. 

Corning options are receiving special attention in the waking trading hours, with 13,000 calls and 10,000 puts across the tape so far. The most popular contract by far is the weekly 1/30 96-strike put, with positions opening there as well. 

Meanwhile, GLW's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 86 out of 100. This means the security has tended to exceed option traders' volatility expectations during the past year

Shares of American Airlines Group Inc (NASDAQ:AAL) are slipping this morning, down 2.2% at $14.25 at last glance, after both the company's fourth-quarter earnings of 16 cents per share and revenue of $14 billion missed estimates. The airline name projected strong revenue growth in 2026, however, expecting to earn 7% to 10% more in the first quarter of this year compared to last. 

On the charts, AAL has been slipping since its Jan. 7, roughly 11-month peak of $16.50. The $14 level -- the site of today's lows and former resistance in September and November -- may keep the pullback in check, though. This level also coincides with the 80-day moving average. Year over year, the equity is down 28.5%. 

Over in the options pits, calls are being picked up at double the intraday average pace. The January 15, 2027 12-strike call is the most active contract, with new positions being sold to open there, followed by the weekly 1/30 15-strike call.

Options look affordable, per the equity's Schaeffer's Volatility Index (SVI) of 49% that ranks in the 18th percentile of its annual range. It's also worth nothing that the stock's Schaeffer's Volatility Scorecard (SVS) ranks at a high 89 out of 100, indicating it has tended to exceed option traders' volatility expectations during the past year.