Speculative Money to Small-Cap, Mid-Cap ETFs
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (The FRED Report) -- In our last article, we wrote about "divergence bottoms" and how it looked as if the U.S. stock market was getting ready to make such a pattern. This now seems to have occurred and we believe that this could be the low point of 2011. In our last FRED Report "Midweek report" we opined that as long as the 1070 area holds, the market can rally into the end of the year.
One of the interesting things about this rally is that the IWM has strengthened a bit more than the SPY, after trading weaker over the last few weeks. We show daily charts of these below.
Smaller stocks tend to do worse when the economy is slowing and there are recession fears in the air. However, if we are correct and recession fears begin to fade, these mid- and small-cap stocks should start to improve on a relative basis. We show charts of the small- and mid-cap ETFs below.
One question we have been asked is whether emerging markets will recover along with the U.S. markets. We are not so sure, and indeed we can see a situation where foreign markets underperform U.S. markets into the end of the year. We have noted, in past FRED Reports that emerging markets may continue to act worse into the end of the year. We show charts of the BRIC countries below and readers should note where they are in relation to the 2010 lows, and then compare them to U.S. indices.
We are suggesting to subscribers that speculative money may be better served in U.S. small- and mid-cap area. Those indices may very well outperform the SPY and foreign markets as well. We will monitor this in the weeks ahead and report as needed.
Select the service that is right for you!
COMPARE ALL SERVICESAction Alerts PLUS
TRY IT FREEJim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
Product Features:
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
TheStreet Quant Ratings
TRY IT FREENew! $49.95/yr
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
Product Features:
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Stocks Under $10
TRY IT FREEDavid Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
Product Features:
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
- Weekly roundups
Dividend Stock Advisor
TRY IT FREEJim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Product Features:
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
TRY IT FREEAll of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
Product Features:
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Options Profits
TRY IT FREEOur options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
Product Features:
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV
