Tightly Coupled System

This is an anecdotal observation. It seems to me that the SMID cap marketplace has changed from a reasonably tightly coupled system to a much more free-wheeling one (I know I am not using these terms in a technically correct sense, but they convey the idea of what I am trying to get across). This relates to the observation that in the old days, ie. prior to August 2007, the daily relative performance of the SMID cap strategy vs the Standard & Poors 1000 was pretty stable and never diverged by much more than 20-30bp, even on a big day. This was the general norm, except that you would always go into earnings season hoping that the skew would be one of upside surprises (vs downside surprises). In contrast, it seems to me that daily relative performance gyrations of +/- 50-100bp are not uncommon now and this seems to be the new normal (at least in my space).