The rally in the equity markets off the August lows was the direct result of the Fed's large scale asset purchase program. The buying was initially concentrated in high beta tech stocks, but the current extension of this rally is seeing leadership from the small cap sector. However, I don't believe this buying has been the result of the Fed's attempts to ramp up assets.
Foreign capital may be flowing into the small caps and the current headline risk in the Middle East, North Africa, Japan, and Europe may be the reason. Money could be moving out of the emerging markets and back into the U.S. The cheap dollar makes investments in the U.S. even more attractive, and increasing growth of dollar-denominated assets means an increasing growth of the supply of U.S. dollars, thus depressing the dollar's value even more.
What is surprising however, is when foreign money comes into the U.S. markets, it generally flows first to large-cap stocks and not to small caps. The market may be favoring stocks that aren't perceived to be exposed to European, Japanese, and MENA risk. Small companies are generally less tied to the global economy than are big U.S.-based conglomerates, and are less risky in that sense.
Combine this "flight-to-quality" with the value that a cheap dollar affords the foreign investor, and you may have the reason why the market is rallying, and small caps are leading the way.
The implications for Cryoport are both good and bad. CYRX is a small cap stock and capital is flowing into that sector. However, CYRX may be perceived as being vulnerable to both supply side and demand side risks because so much of their business has been targeted at emerging countries.
On the supply side, production and supply chains are being disrupted by the horrific events in Japan and the high and volatile price of oil. On the demand side, consumption is declining in emerging economies due to inflation and government policies.
For now, everyone who wants to own CYRX, is long the stock, and the stock's valuation has already seen a substantial increase since the December 2009 lows. For the stock to move appreciably higher, new buyers will have to come into the stock. For the stock to move higher and stay higher, those buyers need to be institutional buyers. Institutional buyers, base their decisions on fundamental and technical criteria, and not on emotion. In the absence of revenue growth, and the potential for both demand and supply side risk within their target market, it is highly unlikely that CYRX will see any institutional participation in the near future.
