“After a trying 2014, U.S. small company stocks are back in favor,” says this morning’s Financial Times.
“Investors and strategists have warmed to the U.S. small-cap sector — sending it to an all-time high this week — as valuations have become more appealing…”
What’s that old line about how yesterday’s newspaper is good only for wrapping fish? Heck, today’s is no better.
“While the market looked dead in the water a few months ago, small stocks went full speed ahead,” wrote Greg Guenthner of our trading desk yesterday.
Fact is, Greg spotted small caps breaking out four months ago, and he’s been beating the drum ever since. Here’s what he said right here in The 5…
- Small caps “were the first group of stocks to indicate that we were in for a correction this fall. And they could be the first light at the end of the tunnel” [Oct. 16]
- “Small caps really have nowhere to go but up” [Oct. 28]
- “Small stocks are quietly finding their mojo… You do not want to bet against small-cap stocks right now” [Nov. 25]
- “The Russell 2000 small-cap index has just broken above its August highs. It’s only a matter of time before it sets a new record” [Dec. 22 — a new high was set on the 26th]
- Small caps “are starting to feel their oats. Amazingly, hardly anyone seems to have noticed — but the signs are there.” [Jan. 13]
Since that October low, IWM — the Russell 2000 ETF — is up 13%. And it’s still not too late to jump in:
“The Russell 2000 small-cap index didn’t budge in 2014,” Greg reminds us. “Sure, we experienced some back-and-forth action, but aside from a short-lived breakdown in October, small caps essentially treaded water all year.
“That sets us up perfectly for a big comeback year for small caps.”
You say you missed out? Well, we bring you regular updates from Greg and his trading partner Jonas Elmerraji here in The 5… but maybe you read them merely as a “pulse of the market” thing, for entertainment purposes only.
That’s too bad… because the chart patterns they follow have proven to be one of the most powerful moneymaking tools you can use in your portfolio. Powerful enough to pull down hundreds of dollars in weekly profits, over and over.
We think you’ve missed out long enough. So we pushed Greg and Jonas to organize an online training series that will empower you to spot big market shifts — just the way they spotted the small-cap breakout last fall.
It won’t cost you a thing to participate. Nor do you have to give us a credit card number. All we ask is that you sign up in advance so we can make room for everyone and ensure our servers don’t crash. Here’s where to sign up.
Another snoozer day on Wall Street: As we write, the major indexes are little changed, the S&P 500 a hair below 2,100.
Nothing can meaningfully move the needle right now — certainly not the Fed minutes yesterday that indicated no rush to raise interest rates. Nor today’s many crosscurrents, to wit…
- Wal-Mart could only meet the Street’s earnings expectations, not beat them; WMT is down 3% at last check
- Crude is down more than 4% at last check, back below $50
- The Philly Fed survey — a measure of manufacturing in the mid-Atlantic — registered its weakest reading in a year. Factory activity is still growing, but barely
- Germany has rejected Greece’s request for a six-month extension of its bailout loans.
Expect the Germans and the Greeks to play chicken right up to the end of the month, when Greece’s next payment is due. And then, as Chris Mayer forecast in this space yesterday, expect the Germans to relent.
Gold got a bit of a pop from the Fed’s “dovish” minutes yesterday… and it’s holding onto those gains today. As we write, the bid is $1,211.
“Marcellus is a national asset,” said the individual our Byron King will describe only as a “very senior U.S. government official.”
For years, Byron has sung the praises of the Marcellus/Utica shale play in Pennsylvania, Ohio and West Virginia — “a stupendous energy resource,” he says.
Affirmation came recently when Byron attended a day of private briefings on U.S. energy. “I agreed not to name names,” he says, “but the room was filled with executives from well-known oil companies, banks and government agencies. This was top people, meeting and speaking candidly with other top people. Billions of dollars of capital investment ride on this information.”
Back to the very senior U.S. government official: “If we do it right, Marcellus [will help] keep the U.S. a leading global power for a long time to come.” As in the next 100 years.
Demand for Marcellus gas is growing, Byron explains, “in no small part due to the impending shutdown of dozens of large, coal-fired power plants across the Midwest and Southeast, following stricter environmental regulation. Right now, there’s insufficient pipeline infrastructure to collect gas and transport it to generating plants.”
Good news for pipeline plays, who collect their fees no matter the price of oil and gas. Spectra Energy (SE) is a longtime favorite of Byron’s: The five-year chart is a steady march upward, and it trades at a modest discount from its highs last summer.
Well, well… Obamacare enrollment might well be reopened now that we’re approaching the height of tax season.
Open enrollment under the Affordable Care Act ended on Sunday. “But,” as the Reuters newswire reminds us, “some people may not realize they face a penalty for not having coverage until they file their tax returns in coming weeks.”
Uh-huh. This is the first year of the penalty. The Department of Health and Human Services says it will make a decision within the next two weeks. “We’re going to analyze it, we’re going to think about it and we’ll be back,” says HHS Secretary Sylvia Burwell. “And we will be back quickly on it.”
[Ed. note: Before you file this year, make sure you’re aware of every available avenue to shrink what you owe to the IRS or maximize your refund. For instance…
- The “boomer’s dream,” and how to deduct 100% of your medical expenses… a timely tax secret that saves you money on Obamacare
- A loophole that lets you file under head-of-household rates, even though you have no children! It’s perfectly legal and could save you thousands of dollars
- A valuable way to deduct thousands of dollars without a single receipt. No longer will you let missing receipts keep you from taking deductions you’re entitled to.
It’s all legal and above-board. And it could save you thousands. Check it out now, before you file.]
It took long enough… but Steve Cooksey can blog freely again.
Mr. Cooksey is a Type 2 diabetic who got off insulin and medication by following a low-carbohydrate paleo diet. He blogged frequently about his experience, complete with meal plans and recipes, at his Diabetes Warrior website.
As we chronicled three years ago, Cooksey’s site incurred the wrath of the North Carolina Board of Dietetics/Nutrition. The board notified him he was providing dietary and nutritional advice without a license. The bureaucrats even helpfully sent printouts of his blog entries with the offending portions red-lined.
Cooksey went to court. This morning, three years later, the following appears on his site…
The good folks from the Institute for Justice took up Cooksey’s case. Last week, the matter ended in a whimper, as the North Carolina Board of Dietetics/Nutrition voted to adopt new guidelines allowing bloggers to blog freely.
“North Carolina cannot require someone like Steve to be a state-licensed dietitian,” says Cooksey’s lawyer Jeff Rowes, “any more than it could require Dear Abby to be a state-licensed psychologist.”
Mr. Rowes sounds as if he’s joking. He’s not. The Institute for Justice is also litigating a case on behalf of John Rosemond, whose syndicated column on parenting appears in 200 newspapers. The psychology board in Kentucky ordered him to knock it off because his advice constitutes the “unlicensed practice of psychology.”
“Dave,” a reader writes after yesterday, “more to the point on that Sun Journal cover and having stamped in big red letters ‘CANCELLED’ over the ‘Blizzard on the Way’ lead story was their priority of having Jeff Gordon, NASCAR racer extraordinaire, raising his arms in celebration of winning this year’s Daytona 500 pole position and covering part of the paper’s name at the top of the page.
“Now there’s a town and newspaper with their priorities in good order! At least in my estimation.
Besides, aren’t blizzards a way of life up there in Maine, anyways? Not to bring down the hate mail from your Maine readers, it’s just that I’m in Washington (the state, not D.C.), in my log cabin, sipping my Starbucks coffee, buying things online from Amazon, with my Microsoft OS laptop, sweltering in this 60 degree heat wave, without a drop of rain for over a week! I believe the coffee and heat are affecting my judgment.
“Keep the good work, economic info and NASCAR news a-coming! (LOL!) Love The 5.”
The 5: Heh, you inspired us to dip into The 5’s archives… where in May 2012 we mentioned a study that revealed the impact of the struggling economy on NASCAR, performed by the Public Notice think tank in conjunction with a group called Race Fans 4 Freedom.
It noted that attendance in 2010 had fallen back to 2003 levels. Thus, the two major track owners — International Speedway Corp. (ISCA) and Speedway Motorsports Inc. (TRK) — had seriously underperformed the S&P 500 during the “recovery” from 2008.
Turns out that underperformance has continued…
More follow-up: In 2013, NASCAR responded to the slumping attendance figures by… ceasing to reveal any attendance figures at all.
But empty seats are hard to hide on TV. Last year, the CEO at Dover International Speedway — one of the few tracks not controlled by ISCA or TRK — apologized to drivers before the June 1 race for the lack of spectators. And Daytona International Speedway has removed a grandstand section.
A lousy economy? Or lousy racing? Hmmm…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. As a loyal 5 reader, you got a notice last Friday inviting you to watch an exclusive presentation.
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