Small Caps Are Driving Positive Seasonality
Despite concerns about AI valuations, there was steady buying all day.
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There was steady buying all day on Wednesday following a mixed start. The Russell 2000 (IWM) led the way with a gain of 1.85%, helping push 70% of all stocks into positive territory. The number of new 12-month highs was over 200 names, and the Nasdaq 100 (QQQ) managed a positive close despite some weakness in the Magnificent Seven (MAGS) .
There are still concerns about AI valuation, which kept Microsoft (MSFT) , Apple (AAPL) , Nvidia (NVDA) and Amazon (AMZN) in negative territory, but buying power is rotating into a variety of other areas, helping the indices perform.
The Russell 2000 has only closed higher two other times in history than it did on Wednesday, and technical conditions look good for further upside.
Some employment news and inflation data is coming up in the next two days that will receive some attention, but a Federal Reserve interest rate cut is now a near certainty next week, and that is helping to provide market support. Bonds are still struggling, but the crypto sector and Bitcoin (IBIT) have improved after some brutal action on Monday.
It is starting to feel like positive seasonality is kicking in, and that is driving some fear of missing out (FOMO). I will have to work harder at putting more cash to work. It has not been easy due to choppiness and inconsistencies in leadership.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
