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Friday, November 17, 2017 12:55:56 PM
Small Caps for Sale: Seasonal Sweet Spot Setup
By: Almanac Trader | November 17, 2017
There has been a good deal of rhetoric lately as to how small caps have underperformed this year. On closer examination however small caps have actually performed right in line with historical seasonal patterns and are poised for their usual seasonal breakout which tends to begin in late-November, but does not fully get underway until mid-December.
Yesterday’s outperformance by the Russell 2000’s up 1.6% on the day compared to 1.3% for NASDAQ and 0.8% for DJIA and S&P 500 indicated to us that small caps are on the brink of breaking out into their typical yearend rally, outperforming larges caps from about mid-December to early-March.
The chart below taken from page 110 of the Stock Trader’s Almanac 2017 shows the one-year seasonal pattern of the ratio of the Russell 2000 to the Russell 1000 from July through June to highlight the perennial low point of this relationship November and the winter rally mentioned above.
We have added the performance of this ratio in 2017 so far through November 13 and updated the historical average pattern through June 30, 2017. While this year’s pattern has more amplitude, the trend is quite similar to the historical pattern. Small caps underperformed from June through late-August, then had the usual Labor Day rally, albeit greater and a bit longer, followed by a customarily weak October. It now appears that small caps are setting up well for their season of outperformance.
http://jeffhirsch.tumblr.com/post/167590756678/small-caps-for-sale-seasonal-sweet-spot-setup
• DiscoverGold
Click on "In reply to", for Authors past commentaries
By: Almanac Trader | November 17, 2017
There has been a good deal of rhetoric lately as to how small caps have underperformed this year. On closer examination however small caps have actually performed right in line with historical seasonal patterns and are poised for their usual seasonal breakout which tends to begin in late-November, but does not fully get underway until mid-December.
Yesterday’s outperformance by the Russell 2000’s up 1.6% on the day compared to 1.3% for NASDAQ and 0.8% for DJIA and S&P 500 indicated to us that small caps are on the brink of breaking out into their typical yearend rally, outperforming larges caps from about mid-December to early-March.
The chart below taken from page 110 of the Stock Trader’s Almanac 2017 shows the one-year seasonal pattern of the ratio of the Russell 2000 to the Russell 1000 from July through June to highlight the perennial low point of this relationship November and the winter rally mentioned above.
We have added the performance of this ratio in 2017 so far through November 13 and updated the historical average pattern through June 30, 2017. While this year’s pattern has more amplitude, the trend is quite similar to the historical pattern. Small caps underperformed from June through late-August, then had the usual Labor Day rally, albeit greater and a bit longer, followed by a customarily weak October. It now appears that small caps are setting up well for their season of outperformance.
http://jeffhirsch.tumblr.com/post/167590756678/small-caps-for-sale-seasonal-sweet-spot-setup
• DiscoverGold
Click on "In reply to", for Authors past commentaries
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
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