Small Caps and Value Trying

November 3, 2019

Weekly Market Outlook

By Keith Schneider

blankEquity markets globally blasted higher this week with Russia leading the pack of actively traded country funds up, +2.65%. As we highlighted last week, Russia has been strong and received added help from the energy market on Friday.  Russia (RSX) is now up over +15% the past 6 months, outpacing the US, which is up about +4%.

On the domestic front, both the S&P 500 and the NASDAQ 100 hit new all-time highs. The big laggard has been IWM (Grandpa Russell), and that is potentially shifting. It has either broken out of a declining 6-month channel or about to… depending on how one draws the upper trendline. IWM’s next move is a big input as to the underlying persistence of the recent strength.

Meanwhile, the impeachment proceedings of Donald Trump are picking up steam, but the markets are either oblivious or impervious. Mr. Market is taking his cues from the Fed and the White House. In fact, the twitter storm from the White House about a deal with China helped fuel the rally this week.

This week’s highlights are:

  • Risk Gauges are still in risk-on mode
  • NASDAQ 100 and the S&P 500 hit new all-time highs
  • Volume patterns are confirming price action for key US Equity benchmarks
  • Market Internals are still positive and worked off overbought levels while working higher
  • Biotech and Health Care led all sectors this week, improving the outlook of the Modern Family
  • Semis hit new highs, while Retail was down on the week
  • Gold and Silver are in a compression pattern, poised for another run-up
  • Foreign equities are on the cusp of major breakout relative to the US
  • The Dollar looks heavy and is still in a waring phase on the daily charts

On Friday, we held a free training session that reviewed how we build our Risk-On/Off gauge, and how you can use it to make sense of this historic bull market. You can access the replay of that training session here.

Finally, assuming key equity benchmarks remain in a bullish market phase, small to mid-cap value plays (especially if they are from emerging markets) still offer plenty of upside.

Best wishes for your trading,

Keith Schneider


P.S. We’ll be presenting a master class at the TradersExpo this week in Las Vegas. Click here to learn more about it. We hope you can attend, or stop by and say hello!

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