New 10-Month Highs for Small-caps

JC Parets
February 1, 2023

Where I come from do you know what we call higher lows and higher highs?

Uptrends.

Do you know what stocks do in bull markets?

They go up.

And speaking of going up, we just watched the Small-cap Russell2000 Index go out at new 10-month highs.

Do you know what's not evidence of a downtrend?

New 10-month highs.

This looks like classic polarity to me.

Take a look at all that resistance from 2018 and 2020 turning into support since the stock market bottomed last June:

And remember, some of the worst indexes made new lows in October, although for just a brief moment before ripping. However Small-caps did not.

Small-caps bottomed in June with most stocks in the market.

The path of least resistance remains up.

It's nothing new. It's just the trend.

Here's a look at this week's Minor Leaguers report that looks for the strongest stocks between $1B and $4B market cap.

There are opportunities out there.

I would encourage you to take a look at some of the leaders in the small-cap space.

Keep in mind, these are not "illiquid garbage names".

Yes, there are illiquid garbage names.

But those are not what we're buying.

We're buying stocks with plenty of liquidity in them where prices are moving from the lower left to the upper right.

They just happen to only have a market cap between $1B and $4B.

Plus there are added advantages to this group. Their individual correlations tend to be lower with the other major indexes. The relative strength can't be hidden, because there's less to go around.

Some of these are very attractive in this environment.

Check out the full Minor Leaguers Report before these stocks get called up to the bigs without you in them!

Let me know what you think!

- JC

 

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