The Investor Manifesto
Advertisement
  • Business
  • Politics
  • Investing
  • Stocks
No Result
View All Result
  • Business
  • Politics
  • Investing
  • Stocks
No Result
View All Result
The Investor Manifesto
No Result
View All Result
Home Stocks

Q1 Ends With A Small Cap Attack! One Small Cap Sector is EXPLODING Higher!

March 31, 2024
in Stocks
Q1 Ends With A Small Cap Attack!  One Small Cap Sector is EXPLODING Higher!
0
SHARES
2
VIEWS
Share on FacebookShare on Twitter

Let’s start off by reviewing a quarterly chart of the S&P 500 ($SPX), NASDAQ 100 ($NDX), and Russell 2000 (IWM) since this secular bull market began in early-April 2013 (44 quarters ago):

S&P 500:

NASDAQ 100:

Russell 2000:

When you look at these 3 charts, an obvious first conclusion can be made. If we’re in a bull market, we want to be invested in the NASDAQ 100 stocks, which have dominated both the S&P 500 and Russell 2000. The 44-quarter rate of change (ROC) provides us roughly the gains made on each of these indices since the secular bull market began in 2013, 11 years ago.

Before we write off the small cap stocks, however, we need to use some perspective and understand that this asset class moves into and out of favor. Because it’s underperformed the NASDAQ 100 badly these last 11 years, it makes sense to stick with NASDAQ 100 stocks until small caps tell us otherwise. They could be telling us otherwise right now. Check out this 11-year weekly absolute price chart of the IWM and note when it has outperformed the NASDAQ 100 in the past:

When we see key breakouts in the IWM, the group generally shows relative strength vs. the NASDAQ 100 – at least for several months up to a year. That relative strength sometimes will turn higher at bottoms just before key breakouts. The current pattern seems to be looking very similar to prior periods when the IWM went on a relative tear to the upside. While the IWM has yet to show a ton of relative strength, I created a User-Defined Index (UDI) that tracks the relative INTRADAY performance of the IWM vs. the QQQ (ETF that tracks the NASDAQ 100) and it’s currently near its highest level since this huge advance began in October 2023. In other words, current rotation is favoring the small cap IWM, which supports my theory that we’ll see outperformance by the IWM over the next few months to a year. Check out this chart:

The IWM has performed well since 2013, but we all have investment decisions to make and we want the BEST performers, or at least I hope that’s what everyone else wants. If I’m invested in something that’s going up, but underperforming, I feel like I’m leaving money on the table. So if I’m going to overweight an area of the market, I need to see signals that suggest it’s a wise move. Right now, the IWM is showing those signals. If and when those signals reverse, then moving back to an overweight position in the NASDAQ 100 makes a ton of sense.

So now that we’re finally seeing some relative strength from the beaten-down small cap group, let’s review where that small cap relative strength is coming from using an RRG and the Invesco small cap sector ETFs:

Small cap energy (PSCE) and small cap industrials (PSCI) are the best two small cap sectors right now as they’re the only two in the upper right leading quadrant, when compared to the S&P 500. Let’s look at both these charts:

Energy (PSCE):

It’s hard not to like small cap energy right now, especially inside this bullish ascending triangle continuation pattern. Ultimately, on a breakout, this would measure to 76-77.

Industrials (PSCI):

The PSCI has already broken out and looks extremely bullish, especially if small caps, as a whole, continue strengthening.

In my Saturday, March 30th Weekly Market Recap, I discuss many stocks in this space, with several just beginning what appears to be a very strong uptrend. To tune in and watch this Weekly Market Recap video, simply CLICK HERE. If you like the video, please help us out by hitting that “Like” button and subscribing to our channel so that you don’t miss future videos. Thanks!

Happy trading!

Tom

Previous Post

Biden campaign reaches out to Nikki Haley voters in new ad: ‘Donald Trump doesn’t want your vote’

Next Post

Overbought Conditions Reflect Strength and Said Strength Drives Momentum Rotation Strategies

Next Post
Overbought Conditions Reflect Strength and Said Strength Drives Momentum Rotation Strategies

Overbought Conditions Reflect Strength and Said Strength Drives Momentum Rotation Strategies

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent News

    The Best Five Sectors, #23

    The Best Five Sectors, #23

    June 16, 2025
    I know why the UN Security Council is irrelevant to Gaza. I was there when the US stood up for Israel

    I know why the UN Security Council is irrelevant to Gaza. I was there when the US stood up for Israel

    June 16, 2025
    US needs a new Monroe Doctrine — this time to guarantee AI dominance

    US needs a new Monroe Doctrine — this time to guarantee AI dominance

    June 16, 2025
    Right to Earn Majority Interest in Highly Prospective Chilean Copper-Gold-Molybdenite Porphyry Project and Placement to raise $2.2m

    Right to Earn Majority Interest in Highly Prospective Chilean Copper-Gold-Molybdenite Porphyry Project and Placement to raise $2.2m

    June 16, 2025
    Disclaimer: TheInvestorManifesto.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Popular

    Radiopharm Theranostics Granted U.S. Food and Drug Administration Fast Track Designation for RAD101 Imaging in Brain Metastases
    Investing

    Radiopharm Theranostics Granted U.S. Food and Drug Administration Fast Track Designation for RAD101 Imaging in Brain Metastases

    June 11, 2025

    Read more

    Recent News

    The Best Five Sectors, #23

    The Best Five Sectors, #23

    June 16, 2025
    I know why the UN Security Council is irrelevant to Gaza. I was there when the US stood up for Israel

    I know why the UN Security Council is irrelevant to Gaza. I was there when the US stood up for Israel

    June 16, 2025
    • About us
    • Contacts
    • Privacy Policy
    • Terms and Conditions
    • Email Whitelisting

    Copyright © 2025 theinvestormanifesto.com | All Rights Reserved

    No Result
    View All Result
    • Business
    • Politics
    • Investing
    • Stocks

    Copyright © 2025 theinvestormanifesto.com | All Rights Reserved