Here's Why The Strength In Small-Cap Stocks Won't Last

Small-cap stocks as measured by the iShares Russell 2000 Index (ETF) IWM hit an all-time high this week, but investors should look to take some of their profit off the table, at least according to Rich Ross of Evercore ISI.

Taking a step back, the Russell 2000 has been showing some signs of weakness, Ross pointed out during a recent CNBC "Trading Nation" segment. Specifically, the index has been an under-performer having gained just 5 percent since the start of 2017 versus an approximate 8 percent gain for the S&P 500 index.

"Lagging in a global bull market is not a great start," Ross emphasized.

Moving forward, there is also reason to be bearish on the small-caps, Ross continued. A strong U.S. dollar is typically a positive for small-cap stocks since most of their business is conducted domestically. But so far this year, the greenback is down by nearly 7 percent, which benefits large-cap global stocks instead.

Ross, a notable technical analyst, also highlighted the fact that the Russell 2000's chart is far from screaming a bullish breakout. Looking at the Russell 2000 chart since the presidential election, the index has actually "stalled" over the past eight months after an initial spike higher immediately following President Trump's election win.

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