Here is this week's video
I wrote most of this about a week ago. I didn’t send it right away because I was concerned some may take it as recommending these stocks right now.
The market had started down last week Monday, Sept 6.
This is about preparing for what to buy after the 4 O’clock Loop downward leg is completed, and we’re in recovery mode. I looked at the recent turn up in the midcap and smallcap stocks for idea’s for future investment choices. It is about determining which stocks investors think will do well in the midcap/smallcap area.
Last week I noted the breakout of midcaps. Now smallcap stocks have reversed off a low in the bullish percents.
This is from the Nasdaq Dorsey Wright report this morning (9/7).
“Small-cap domestic equities have seen a notable improvement over the past two weeks, with the Russell 2000 Index RUT notching a gain of 6.29% from August 20 through trading Thursday which outpaces the 2.15% improvement from the S&P 500 Index SPX over the same time frame. This led the RS (relative strength) in Xs for Small Caps ^RSXSCAP to reverse back up into a column of Xs from 26%, its lowest chart position since we began tracking the indicator in 2003, to a current level of 32%. As a refresher, this indicator measures the percentage of small-cap stocks that are in a column of Xs on their respective relative-strength comparisons against the S&P 500 Equal Weight Index SPXEWI. The reversal up from low field position for this indicator highlights the near-term relative strength small caps are demonstrating over their large-cap counterparts. “
While this is only the seventh time that the RSXSCAP indicator has reversed up from levels beneath 40%, the prior occasions have led to generally strong forward returns for the Russell 2000 Index. Interestingly enough, we also saw the Bullish Percent for the S&P SmallCap 600 Index ^BPSPSML and the Bullish Percent for Optionable stocks ^BPOPTI each reverse up into a column of Xs this week at respective chart levels of 54%. The BPSPSML shows the increased participation coming solely from the small-cap space, which has translated over into broader universes as small-cap names make up about 43% of the roughly 3300 names included in the optionable universe. Reversals higher on each of these bullish percent charts also generally show positive forward returns for the Russell 2000 Index, which improves as the time horizon expands.
The CHURCH of WHAT’s HAPPENING NOW.
The Church of What’s Happening Now is using the wisdom of the market to guide you to new investments that are moving now.
For this paper, I sorted by sector, then by performance for the last 2-week period, 8/20-9/3, since the smallcap move up began.
I used the S&P500 Large Caps, S&P400 MidCaps, and S&P600 SmallCaps in each of the 7 major sectors I report on each week.
I then took the Top 10 stocks in each of the 3 S&P market caps and combined them and sorted by performance, best to worst, of those 30 stocks.
Here are the results.
CONSUMER DISCRETIONARY
#1 DKS (Dick’s Sporting Goods) is a $145 retail stock that is up 32.21% in just the last 2 weeks. It has gained 54.41% on average for the past 3 years. It is a MidCap stock in the Consumer Discretionary sector.
As you can see in the Cap column, 8 of the top 10 performers are either Small Cap or MidCap stocks. 5 are small caps, 3 are MidCaps. The bottom 10 contains 5 Large Caps and 5 MidCaps. Gaming stocks and retail stocks dominate the Top10.
DKS chart $140.19
DKS has just broken support at 136.
(Update 9/14 DKS closed at $130.54. This is why I did not want to publish this last week.)
I would not touch GME. Much too dicey for my taste.
FINANCE
Small caps dominate the top10 and Large caps the bottom10. Not anything that really thrills me on this list, except for EXR.
I like EXR (Extra Space Storage) here. With more than a few million evictions coming up shortly, I think storage company EXR will continue to have a very good year. They also have a very good 3, 5,and 10yr history of being an excellent stock. It would be nice if I could buy it lower, but I really don’t think it’s going to happen in the short term unless we have a general market crash.
Yes, there are 10 Finance stocks that have out-performed EXR over the 2-week span. I just like the business EXR is in and it’s long-term track record.
(9/14 update. EXR closed at $183.56. In this downturn, we should be able to get it in the $175 or better range.)
HEALTHCARE
Healthcare is probably my weakest sector as far as picking stocks go. Small caps are dominating the top of this list, and large caps the bottom.
There are 2 things I like about JYNT (The Joint Corp) besides the name. I like they began the year at 28 and are now at 106, and that their 3 and 5 yr growth rates are over 100%. In all honesty, I know nothing else about JYNT as this is the first time they have been picked up by my radar.
If any subscribers have familiarity of any of the top10 on this list, share on my blog by starting a thread. Positive or negative info is all helpful.
(9/14 update JYNT dropped to $88 and is now at 104)
MEDIA/COMMUNICATIONS
LARGE CAPS dominate the upper middle of the sector still, and have 3 of the top10 spots. IRDM looks attractive on the numbers, but they have to be under deep pressure shortly from Elon Musks’ StarLink.
TTGT (Techtarget, Inc) has some attractive numbers on this list. 3, 5, and 10 year numbers are really outstanding (double the performance of Facebook for 5 years?) Again, I have more homework to do here as I am not familiar with their business (yet). All I know at this point is that they must be doing something right, but they also got slammed from February till May (-35%). I strongly suspect that was more market and sector related than due to company issues.
(9/14 update - TTGT hit 92, dropped to 84, now at 85.20)
TECHNOLOGY
The Top10 smallcaps are all in the top 15 performers, and 9 of the 10 Largecaps are in the bottom 15. Clear as a bell what has been moving the tech sectors on the Slay the SPiDeR circle the past couple of weeks -SmallCaps!
APPS has spent most of this year in a downtrend, but is very close to breaking out and looking at a 50% gain just getting to it’s previous high of 102 earlier this year. It’s $63 now, but I’d prefer to wait to buy until it breaks out of the downtrend at $68, just to be safer. (9/14 update - APPS now at 61.43 and it will be a great buy near 53-54.)
My point with these midcaps and smallcaps is that the stocks on this list are what investors chased off the bottom. These will be excellent choices to buy when this market bottoms.
What I expect to see happen in the markets in the next week or so is another sharp rally up, but it will only last a day or two. Then we’ll see quite a series of down days. I expect to buy a put option on the rally for the Changing My Life sequence.
When the market bottoms in the 4 oclock Loop downturn, then these stocks from the midcaps and smallcaps rally in late August are highly likely to be of very high interest again from investors.
Let’s Go Get the Money
or at least keep what we have.
JimB