Welcome to Episode #59 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by David Bartosiak, Editor of Zacks Momentum Trader and Home Run Investor portfolio services, to talk about the hottest topic on Wall Street right now: the small cap stocks.

In November 2016, the Russell 2000 staged a historic rally as it finished higher 15 sessions in a row. It was only the fifth time in history that the small caps have staged that long of a rally and it was the first long rally since 1996. Remember what happened in 1996?

Alan Greenspan gave his infamous “irrational exuberance” speech in December 1996 as the US stock market heated up. But it wasn’t done moving higher for another 4 years.

Is 2016’s small cap rally the start of a similar run? Or is the rally already over?

In the other four times the small caps have rallied for 15+ sessions, a month after the rally ended, the small caps were up, on average, of 2.4%. And they didn’t finish in the red a single time.

But past performance isn’t always indicative of future results. What do Tracey and Dave think of the rally now? Should you still get in?

Small Cap Stocks to Buy Now

1. Buy the index. Tracey uses the iShares Russell 2000 (IWM) as her go-to small cap ETF.

2. Banc of California (BANC): Dave still likes it despite the short seller attack and other issues. Tracey used to own it in the Value Investor but she sold it during the recent chaos.

3. Tuesday Morning (TUES): Tracey recently added this to the Insider Trader, as the insiders have been buying shares. It’s a home goods retailer which is a strong area of retail right now.

4. Inphi Corporation (IPHI): Dave likes this small cap semiconductor. The semis have been one of the hottest areas of tech.

5. Ultra Clean Holdings (UCTT): Dave also likes this tech company. He owns it in the Zacks Momentum Trader.

What sectors are moving the small caps? The banks have been hot since the election. The financials make up the largest sector in the small cap index, at 18.9%. Not surprisingly, they’ve been a driving force in the rally.

Tracey and Dave disagree about the near-term future of the financial stocks. Listen in to find out why.

But Information Technology and Industrials are also a big part of the index at 17.29% and 14.8%, respectively.

Should you be buying small cap industrials? Tracey likes the industrials. Dave also talks about his love of small cap tech.

What else should you know about the historic small cap rally?

Tune into this week’s podcast to find out.