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(Bloomberg) -- Smaller U.S. stocks could be set for a big run higher into the end of the year, according to Wall Street.A combination of improving economic data, bullish technical signals and a seasonal effect could give a boost to the shares, which have lagged their larger peers for much of the last year, said strategists from Tallbacken Capital Advisors LLC to Saxo Capital Markets Pte.“The technical condition on the Russell 2000/S&P 500 price ratio continues to push higher after several quarters of severe decline,” Tallbacken CEO Michael Purves wrote in a note Monday. “If risk is on into year’s end, we won’t be surprised to see the relative performance continue.”The Russell 2000 Index -- a benchmark for U.S. small caps -- climbed 2.1% Monday to its highest since October 2018, outperforming the broader S&P 500 Index which rose 0.8%. The gauge of smaller companies was about 7% below its all-time high as of 9:50 a.m. in New York Tuesday, while the S&P 500 traded at a fresh record.Improving DataA raft of good economic data last week, from manufacturing to consumer sentiment, may be benefiting the Russell, according to Kay Van-Petersen of Saxo Capital Markets in Singapore. Smaller companies are often seen as closely linked to the domestic economic cycle.The improved performance in the small-cap index could also be coming from hopes of mean reversion versus bigger stocks, or even a short squeeze, Van-Petersen added.Read: Small-Caps Spur Value Trap Warnings Amid Worst Profit Since 2009Evercore ISI technical analyst Rich Ross sees about 10% short-term upside for IWM, an iShares exchange-traded fund that tracks the Russell 2000. The ETF has broken a year-long “stubborn” technical resistance level, with breadth expanding -- a bullish sign -- he wrote Monday.Seasonal MoveMeanwhile, Tallbacken’s Purves noted the median December performance for the Russell 2000 is a 2.5% gain, in data going back to 1979, and that about a quarter of those months saw a return of more than 5%.“Of course, there are plenty of negative Decembers for the Russell 2000, and some can be sharp,” he said. “But if risk is on, there is a good chance for it to continue to gain meaningful ground into the end of the year and perhaps a lift higher in January as well.”(Updates markets in fourth paragraph. An earlier version corrected median Russell 2000 gain in eighth paragraph to 2.5%.)\--With assistance from Divya Balji.To contact the reporter on this story: Joanna Ossinger in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Christopher Anstey at email@example.com, Cormac Mullen, Ravil ShirodkarFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Wall Street's main indexes climbed on Friday, as concerns over global growth were allayed by largely upbeat U.S. jobs report and data out of China that showed factory activity expanded at its fastest pace in more than two years. The tech-heavy Nasdaq hit a record high for the first time since July, while the benchmark S&P 500 notched its fourth record high this week.
S&P500; closed Monday at historical highs, adding 0.55% on the day close. Both expected new Fed interest rates cut and possible US-China trade deal served as key drivers of recent market growth impulse. President Trump, in his Twitter, did not manage to avoid this event, attributing these merits to himself.
As we near the end of October 2019, a very interesting price setup is taking place across many of the US market sectors recently. We only have a total of about seven trading days left in October 2019 and the Financial Sector ETF is rolling over with what appears to be an Engulfing Bearish price pattern near price channel highs. Additionally, the tech-heavy NASDAQ (NQ) has been mostly weaker compared to the ES and YM.
We’ve been writing about the broader US stock market for many months – highlighting the Pennant/Flag formations that have continued to set up since early 2018. Sometimes, the keys to really understanding what is transpiring behind the scenes in the US markets is to pay attention to various market segments and to consider applying some “outside the box” thinking.
Thursday, investors can expect the weekly initial jobless claims figures, as well as existing home sales for the month of August.
Outspoken former White House Communications Director Anthony Scaramucci claims the president is 'unhinged' and in 'steady decline.'
Still, we believe the energy sector is setting up another great trade opportunity for skilled technical traders. Watch how this sets up below $46 and watch for deeper price moves below $45. Once the momentum base is set up, the upside price move should be very clean and fairly quick.
Stocks actually spent most of the session under pressure, but a late session rally helped the S&P; 500 and Dow erase those early losses. The late surge was fueled by a recovery in industrial, energy and health care stocks. Higher U.S. Treasury yields helped bank stocks post solid gains.
The US session keyed off with a Trump tweet and yet another defiant message that gave us no indication the respective Xi-Trump camps are anywhere near to forging a deal. But the tweet set a risk-off tone in markets, and this was then given additional tailwind by a shocker of an ISM manufacturing print in the US, but also in Canada.
With the loss of confidence in the outlook for Corporate America, thanks mostly to President Trump's trade war against China, investors may rush to the exits soon.
Mixed results from data releases and corporate earnings have resulted in cautious optimism if you're investing in ETFs, but the waters have muddied.