| October 31, 2014 | Archives | Unsubscribe | | | | | |
 | | | What Saved the
Market? It's Not What You Think... | | | - Tracking the small-cap spark
- Extending the market rally
- Plus: How to fight a vampire squid
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| | | Greg Guenthner coming to you from Baltimore, MD...
 | | Greg Guenthner | "Do You Have the Guts to Buy the Crash?"
I asked you that question in your October 16th issue, just one day after the market hit bottom. Well, did you take my advice and buy the crash? Sure, it took nerves of titanium to pull the trigger on that one...
But as it turned out, buying at that point was the right thing to do...
Because sure enough, stocks have since snapped to attention - as we predicted they would. The Dow is up over 1,000 points since it bottomed on October 16th. The S&P is up over 130.
OK, now it's quiz time...
Do you know what pulled the market out of its nosedive? I can practically guarantee it's not what you think. The answer is (solemn rolling of drums) small-cap stocks.
That's right, small-caps-- the 98-pound weaklings of this year's market. If you chickened out the first time around, now's the time to scoop them up. Because they've turned a major corner, and they've got a long run ahead of them.
Let me explain why...
The big boys have been kicking sand in the face of the small caps all year. On October 13th (the first day of the week when the market went haywire), the Russell was down nearly 10% year-to-date, compared to about a 2% gain in the S&P. No one wanted small stocks in their portfolio.
But just two weeks ago-- when most investors saw nothing but chaos in the plunging market-- I detected a "silent buy" signal on small-caps. (I baselined a gallon of ice water when the market started collapsing. Having the stuff in your veins helps you keep cool when things start going to seed.) And within the next few days, the magic began to happen. The small-caps began to rise. Here's what we were watching:
None of the stammering sock puppets - sorry, experts - noticed when the small caps started sneaking higher. I don't remember seeing it anywhere else in the financial media. Do you?
But for us, that signal tripped the buy button on the Russell 2000 small-cap index. And now that the rest of the market has found its legs...that "silent buy" is a shining beacon that could finally lead the hated small-caps out of their almost year-long darkness.
The Russell 2000 actually finished higher after the carnage of two weeks ago--while the larger stocks sank like a stone. And remember, these little guys were tanking all year. No one wanted small stocks in their portfolios. Small-caps have endured their bear market. Investor sentiment had swung so far to the downside that small-caps really have nowhere to go but up...
Over the past three weeks, the Russell 200 has gained 10%, while the large-caps in the S&P 500 have squeaked out less than a 5% gain. That's a huge difference for such a short time period. And it's a brand new trend that I think will only get stronger.
Count on smaller stocks shedding their status as laggards as we approach the end of 2014. The road ahead just became a lot smoother... | | | | | | | | | Hold on tight. This "roller coaster" market is about to hit a few more speed bumps. Check this out…. One of the other analysts here at the office has just informed me that a major U.S. government agency plans to "disrupt" sections of the stock market on the following dates… - Wednesday, Nov. 5, 2014
- Friday, Dec. 5, 2014
- Tuesday, Dec. 23, 2014
- Tuesday, Dec. 30, 2014.
| | | | | | | |  | | | | Rude Numbers | Targets, Predictions and Wild Guesses
| | | | 1,015 | points were added to the Nikkei today. That is not a typo. The Japanese index soared more than 6% as the Bank of Japan unexpectedly increased its target for monetary stimulus... | | $1,165 | is where you'll find gold futures. This massive breakdown could lead precious metals much lower in the coming weeks and months. Meanwhile... | | $15.83 | is the price of silver today. The poor man's precious metal is hemorrhaging again. This morning, its down another 3.6%. | | $79.65 | buys a barrel of crude this morning. Will buyers step in here near $80 once again? | | 2,009 | marks the spot for S&P futures this morning. The market could quickly challenge its all-time highs today... | | | | | | | | Rude Trends | When to Buy... When to Sell
| | | You can't teach an old dog new tricks...
So of course, the Vampire Squid's track record of wrongheaded "reports" is going to come into question every time a big market prediction hits the news...
"Goldman did the same thing to us with their gold analysis," remarks a reader.
No kidding.
The "same thing" this gentleman is referring to is a big prediction that goes bust--just like the oil report we highlighted earlier this week. Goldman Sachs says $70 oil? Maybe there's a bounce instead. At least, that's what we're trying to play.
What I'm really waiting for is a Goldman report that predicts the stock market will go to zero. That would be the perfect opportunity to back up the truck and buy everything in sight. If you see this prediction hit the airwaves, tell me ASAP. I won't want to miss it...
[Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner] | | | | | | | Ignore At Your Own Peril | Today's Must Read Links
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