The Hunt for the Next 10 Bagger

[RULiquid]

Small-cap stocks will likely feel the most pain
The action for small-cap stocks is particularly ominous
Following another week of elevated volatility for the broad market, analysts still differ on whether we’re positioned for a prolonged market pullback. But one thing is clear: Small-cap stocks are taking the worst beating.

This chart shows the movement of the Russell 2000 Index (RSU:RUT) over the past 12 months, along with the 20-day, 50-day and 200-day moving averages. The index has dropped below all three averages, which is the type of price momentum that can lead to a larger decline, according to Art Nunes, chief investment officer for Dynamic Investing Group, which has about $70 million in assets under management.

The Russell 2000’s 20-day moving average has moved below the 200-day average, and the 50-day may soon cross below the 200-day average because “there’s no sign buyers are coming into the market,” he told MarketWatch.

“The reason it is important, is that once a new trend emerges, it is persistent,” Nunes said.

The trend for small-cap stocks over several years has been upward, he said, but the 20-day moving average began to decline in January, after which the 50-day moving average began to decline. “Now it appears the long-term trend is about to reverse,” he said. http://www.marketwatch.com/story/small-cap-stocks-will-likely-feel-the-most-pain-2014-08-10