Blue chips are sluggish and the index can't rise much if only metal shares are strong, although trade in some second-tier shares is active.

Investors snapped up other previously beaten down stocks, including second-tier shares, as sentiment improved on the back of Wall Street's rebound overnight.

Many second-tier shares gained but blue chips were sluggish and telecommunications-related shares were hit by profit-taking.

The current levels are pretty high and the second-tier stocks are also volatile, so a cautious approach is required,' he said.

Many industrials and second-tier stocks were strong.

Such second-tier stocks can pose a problem: once they are bought, they can be difficult to sell, because so few shares are traded.

Among the biotech group, Mr. McCamant recommends second-tier stocks, those with drugs farther along in development.

Citigroup points out that this phenomenon is repeated around the world – everywhere, riskier indices of second-tier stocks are beating their blue-chip counterparts.

"The second-tier stocks are continuing to move up," said Peter Cardillo, chief strategist at Westfalia Investments.

The development of second-tier stock markets, IPA markets, has improved enormously thanks to investment services and other directives and much greater competition.

The Nationwide Series is NASCAR's second-tier stock car circuit, often drawing many of the sport's top drivers.

There were a number of trading updates for the second-tier stocks, including engineering group Melrose, which reported cash generation improved in the first half and trading remained in line with expectations.

Second-tier stocks in Hong Kong, particularly appliance makers, were benefiting from the rotation out of blue chips that often occurs once the market reaches a temporary high, Wong said.

This may be true about the Standard & Poor's 500-stock index, but it is not likely true about second-tier stocks and certainly not true about most small company stocks.

Online grocery group Ocado was the single best performer among the second-tier stocks, climbing 11½ to 187½p, taking it back above its 180p IPO price for the second time this year.

The RTS Standard and RTS-2 are compiled similarly to the RTS Index, from a list of top 15 large-cap stocks and 50+ second-tier stocks, respectively.

The Emerging Mexico Fund, which includes some unlisted companies and second-tier stocks as well as some of the best-known plays on the Bolsa, as the Mexican market is called, has climbed 79.5 percent this year.

SINGAPORE—The Singapore Exchange Ltd. said it is making a $8.3 billion cash and shares takeover offer for the operator of the Australian bourse, aiming to vault from second-tier stock market to leading Asian finance center.

"We've found more bargains in second-tier stocks in Western Europe than probably anywhere else around the world," Mr. Wyckoff said, noting that he has also been encouraged by more accounting standardization there and a new-found activism among institutional stockholders.

Even though former V8 champion Marcos Ambrose had successfully graduated from truck racing to NASCAR's second-tier stock car competition, there was no interest from NASCAR teams in giving another Australian road racer a chance.

ESPN, citing an unnamed source, said those talks continue as well with a possible February debut at Daytona before the IndyCar campaign opens in March at Brazil and up to a dozen other races in second-tier stock car races.

Back with the second-tier stocks, software company Micro Focus edged 22 higher to 666p, with Canaccord Genuity analyst Jonathan Imlah arguing the group may be able to boost the amount of cash it returns to investors by up to 50pc in coming years.

"In the last three months you couldn't lose money in any blue-chip stock, and it was very difficult to make money in any second-tier stocks," according to Mr. Feshbach, who thinks that all might be changing with the stocks of smaller companies winning more friends.

Given his pessimistic views, it is not surprising that Mr. Metz warns investors to be conservative, accrue cash, pay down debts and selectively acquire beaten-down stocks like semiconductor companies and undervalued second-tier stocks in the United States and Asia.

Elsewhere among the second-tier stocks, a debt refinancing lifted homebuilder Barratt Developments 17.7 to 329.1p, while construction firm Balfour Beatty added 5.1 to 227.8p on the announcement one of its joint ventures had won a seven year contract with Thames Water worth as much as £1.5bn.