On Friday both the NASDAQ and S&P 500 recouped some of their losses from the day before. Although the indexes have the potential to possibly set new highs, I firmly believe taking some money off the table in the large tech arena is prudent. The only reason I think there is any upside in the next 60 days is that earnings season is upon us and the Federal Reserve has shown interest in the possibility of lowering interest rates. And the big story is that the small-cap Russell 2000 had its highest close in 2 ½ years. I’m sure many investors missed this important new high. Because small-cap stocks normally perform extremely well when the Federal Reserve is lowering interest rates, it seems we are finally almost there. And Friday’s close of the Small Cap Russell 2000 is showing signs of the big money finally going into these stocks after being neglected for the past 2 1/2 years. I anticipate money coming out of the high-flying tech stocks and going into the small-cap arena. My stock picks in the near term will reflect this anticipated move.
Always remember: FOLLOW THE BIG MONEY! They have more than us. If they are selling big tech, I am also a seller; if they are (rotating money) buying small caps, so am I. Use them to your advantage. We will try to keep you informed. Remember, the market is a huge supply-demand equation (if they are sellers, it creates supply, if they are buyers of small-cap, it creates demand).
From Friday’s closing number on the Russell 2000 (2,148), I think it will outperform all the other major indexes (S&P 5,615, the Dow 40,000, and the NASDAQ 18,398) over the next 12 months or more.