From the Trading Desk

Small Caps Lag; Broad Market Inches Higher

Another lackluster session as the market continues to remain range bound. Small cap stocks continue to lag the broader market and the Russell 2000 remains below its 50 day moving average. Investors are simply not excited to jump into small cap stocks. At some point this market is going to need to push higher. We will simply follow what the market will give us. If we are to begin a new downtrend then so be it. We are not about to fight any trend. The most prudent course here is to monitor exits and continue to stay focus on the task at hand.

What most see in the Russell 2000 is a lack of interest by investors to take on risk. Higher volatile names like the ones in the Russell are naturally more risky if you do not know how to handle position sizing and exits. The theory is if investors are not willing to take on risk then the entire market does not have a real shot at pushing higher. Regardless if this is the case we still see a lack of interest in the Russell 2000 and where many are flocking to is the NASDAQ 100. We want to be in the movers and shakers, not in the laggards. If the situation improves itself then so be it. We cannot force the market to do what we want. Do not fight the market, it will always win.

Not much else to report other than we continue to remain in a holding pattern. We’d very much like this market to move higher, but it is what it is. The good thing here is we do not have a high level of distribution across the board. The S&P 500 does have 5 days and the NASDAQ 3, but it is not a terribly high number. Obey your exits and always cut your losses short. Keep grinding.

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