/Small caps haven’t rallied like this since 1983, and a big pullback is likely in the new year

Small caps haven’t rallied like this since 1983, and a big pullback is likely in the new year

Traders work on the floor of the NYSE.

NYSE

(This story is for CNBC Pro subscribers only.)

Small caps’ return-to-normal snapback may have gone too far, too fast.

The Russell 2000 is having its best quarter in more than 30 years, while soaring more than 100% from its March lows. There has only been one other time — in 1983 — where the index more than doubled from a low within a year or less, according to Bespoke Investment Group.

The group, which is most sensitive to overall economic growth, has outperformed its large-cap counterparts as investors rotated into beaten-down value stocks on the back of the positive vaccine developments. However, some strategists are sounding the alarm on the disconnect between stock performance and company fundamentals as well as an ominous technical picture.