Bond Market Driving Growth Stocks Higher

March 26, 2023

US interest rates have fallen to their lowest levels since Q3 last year.

And with falling rates has come a consistent bid into Technology and growth all year so far.

That has driven the Nasdaq100 to its highest weekly close in 7 months:

And it's not just Large-cap Growth that's showing relative strength.

You're seeing it as you go down the cap scale as well.

Look at Small-cap growth stocks hitting new 52-week highs relative to Value:

This is all being driven by interest rates.

So proof once again that even if you don't trade bonds, they need to be front and center for stock traders and investors.

Now, on an absolute basis, the Russell2000 Small-cap Index is at key levels right now.

The buyers stepped in this week, and they better keep stepping in, or else....

That former resistance in $IWM from 2018 and 2020 has turned into support since last summer.

But if that gives out, it's going to be a major problem for this market.

I look at it in a very similar way to how Financials are currently testing their former highs - See here.

It's the same thing.

They're flirting with trouble.

Will the buyers keep stepping up?

Or is a failure inevitable?

Feel free to weight in.

Let us know what you think!

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