TSLA - An Opportunity In Small Caps Or A Danger Sign All Important CPI Ahead | Benzinga
To gain an edge, this is what you need to know today.
Small Caps
Please click here for an enlarged version of the chart of small cap iShares Russell 2000 ETF (ARCA: IWM).
Note the following:
- The chart shows the 2021 high in small caps.
- The chart shows the high in small caps in 2023.
- The chart shows small caps are still well below the 2021 high.
- Small caps staged a big rally in 2023, but small caps have not rocketed to new highs like the S&P 500. This may be an opportunity for investors. Here is what investors should keep in mind:
- IWM could be a catch up trade.
- On the other hand, small caps should have performed better than they have.The difference could be explained due to the lack of high flying AI stocks in IWM, or the difference could be a warning.
- Small caps are interest rate sensitive and should do well when the Fed cuts rates.
- Small caps are economically sensitive. As such, small caps should do well if there is no landing.
- IWM includes many banks. If there is no banking crisis, IWM should do well.
- If the overall stock market maintains its gains, small caps provide an opportunity to investors.
- Fed speak is ahead. The Fed’s Michelle Bowman, Tom Barkin, and Neel Kashkari will be speaking today.
- Consumer Price Index (CPI) will be released Tuesday at 8:30am ET. The stock market is assuming that inflation will continue to go down. If CPI shows that inflation is continuing to come down, S&P 500 will rally. On the other hand, if CPI is stronger than expected, there is a lot of air in the stock market and as such may lead to a rapid pullback.
- Momo gurus are already being proactive to prevent a selloff if the data shows that inflation is not coming down. The new ...