In the bigger picture I believe that large cap stocks are a better value than small cap stocks. However, I am not quite ready to make bets against small cap stocks. I believe that a large part of the reason small caps have been outperforming has been the amount of stock issuance that has gone on in the large cap space, predominantly by large cap financials.
Once the government disposes of their Citigroup stake, which is worth about $40 billion, the vast majority of large cap issuance will be out of the way. At that point I would be more willing to make a large cap vs. small cap bet. For now most of the supply is coming in the large cap space and in the short run supply and demand trump fundamentals.