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Premium daily stock trading service. In our Stock Trading Alerts, we provide extensive analyses and comments at least 1 time per trading day, usually before the opening bell. The analyses focus on all the key factors essential to determining the medium- and short-term outlook for the S&P 500 futures, spanning over several time frames, credit markets and S&P 500 sectors and ratios. They also capture the key fundamental developments, events and trends in assessing the prospects and health of the S&P 500 moves. This way, you’re kept up-to-date on important developments that far too many investors are apt to miss or underestimate.

Whether you're looking for objective analyses to broaden your horizon / add confidence to trading decisions, or want to get inspired by our trade calls for S&P 500 futures, Stock Trading Alerts are the way to go.

  • Worst for Stocks Over?

    March 1, 2021, 8:50 AM

    Is the worst of what the last few weeks brought over? February started off with so much promise, only to be ruined by surging bond yields.

    The way that bond yields have popped has weighed heavily on growth stocks. Outside of seeing a minor comeback on Friday (Feb. 26), the Nasdaq dropped almost 7% between February 12 and Friday’s (Feb. 26) close.

    Other indices didn’t fare much better either.

    The spike bond yields, however, in my view, are nothing more than a catalyst for stocks to cool off and an indicator of some medium to long-term concerns. But calling them a structural threat is a bit of an overstatement.

    Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, inflation may return.

    I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.

    He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.

    So was the second half of February the start of the correction that I’ve been calling for? Or is this “downturn” already over?

    Time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of this month could happen.

    Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in almost a year.

    A correction could also be an excellent buying opportunity for what could be a great second half of the year.

    Pay attention to several things this week. The PMI composite, jobs data, and consumer credit levels will be announced this week.

    We have more earnings on tap this week too. Monday (March 1), we have Nio (NIO) and Zoom (ZM), Tuesday (March 2) we have Target (TGT) and Sea Limited (SE), Wednesday (March 3), we have Okta (OKTA) and Snowflake (SNOW), and Thursday (March 3) we have

    Broadcom (AVGO).

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    The downturn we experienced to close out February could be the start of a short-term correction- or it may be a brief slowdown. A further downturn by the end of the month is very possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    Nasdaq- a Buyable Slowdown?

    Figure 1- Nasdaq Composite Index $COMP

    The Nasdaq’s downturn was so overdue. Even though more pain could be on the horizon, I like the Nasdaq at this level for some buying opportunities.

    If more losses come and the tech-heavy index dips below support at 13000, then it could be an even better buying opportunity. It can’t hurt to start nibbling now, though. If you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.

    Plus, if Cathie Wood, the guru of the ARK ETFs that have continuously outperformed, did a lot of buying the last two weeks, it’s safe to say she knows a thing or two about tech stocks and when to initiate positions. Bloomberg News’ editor-in-chief emeritus Matthew A. Winkler wouldn’t have just named anyone the best stock picker of 2020.

    Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.

    Now? As tracked by the Invesco QQQ ETF, the Nasdaq has plummeted almost 7% since February 12 and is closer to oversold than overbought. !

    While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony last week (even if I don’t totally buy into it). Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?

    Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.

    The RSI is king for the Nasdaq. Its RSI is now around 40.

    I follow the RSI for the Nasdaq religiously because the index is merely trading in a precise pattern.

    In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.

    • December 9- exceeded an RSI of 70 and briefly pulled back.
    • January 4- exceeded a 70 RSI just before the new year and declined 1.47%.
    • January 11- declined by 1.45% after exceeding a 70 RSI.
    • Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.

    I like that the Nasdaq is almost at its support level of 13000, and especially that it’s below its 50-day moving average now.

    I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

    Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.

    For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

    For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

  • Finally, the Stock Market Tanks

    February 26, 2021, 9:15 AM

    Surging bond yields continue to weigh on tech stocks. When the 10-year yield pops by 20 basis points to reach a 1-year high, that will happen.

    Tuesday (Feb. 23) saw the Dow down 360 points at one point, and the Nasdaq down 3% before a sharp reversal that carried to Wednesday (Feb. 24).

    Thursday (Feb. 25) was a different story and long overdue.

    Overall, the market saw a broad sell-off with the Dow down over 550 points, the S&P falling 2.45%, the Nasdaq tanking over 3.50%, and seeing its worst day since October, and the small-cap Russell 2000 shedding 3.70%.

    Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, say welcome back to inflation.

    I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.

    He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.

    This slowdown, namely with the Nasdaq, poses some desirable buying opportunities. The QQQ ETF, which tracks the Nasdaq is down a reasonably attractive 7% since February 12. But there still could be some short-term pressure on stocks.

    That correction I’ve been calling for weeks? It may have potentially started, especially for tech. While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of March could happen.

    I mean, we’re already about 3% away from an actual correction in the Nasdaq...

    Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”

    Look. This has been a rough week. But don’t panic... look for opportunities. We have a very market-friendly monetary policy, and corrections are more common than most realize.

    Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.

    A correction could also be an excellent buying opportunity for what could be a great second half of the year.

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    Nasdaq - To Buy or Not to Buy?

    Figure 1- Nasdaq Composite Index $COMP

    This downturn is long overdue. More pain could be on the horizon, but this road towards a correction was needed for the Nasdaq.

    Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.

    Now? As tracked by the Invesco QQQ ETF, the Nasdaq has plummeted by nearly 7% since February 12 and is trending towards oversold levels! I hate to say I’m excited about this recent decline, but I am.

    While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony the other day (even if I don’t totally buy into it). Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?

    Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.

    The RSI is king for the Nasdaq. Its RSI is now under 40, which makes it borderline oversold.

    I follow the RSI for the Nasdaq religiously because the index is simply trading in a precise pattern.

    In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.

    • December 9- exceeded an RSI of 70 and briefly pulled back.
    • January 4- exceeded a 70 RSI just before the new year and declined 1.47%.
    • January 11- declined by 1.45% after exceeding a 70 RSI.
    • Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.

    I like that the Nasdaq is almost the 13100-level, and especially that it’s below its 50-day moving average now.

    I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

    Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.

    For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

    For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

  • Shortest Stock Correction Ever

    February 24, 2021, 9:05 AM

    What a day that was. What started off looking like a sea of red not seen in months ended with the Dow and S&P in the green.

    It was an overdue plummet- at least that’s what I thought at the start of the day. The Dow was down 360 points at one point, and the Nasdaq was down 3%.

    But by the end of the day, Jay Powell played the role of Fed Chair and investor therapist and eased the fears of the masses.

    The Dow closed up, the S&P snapped a 5-day losing streak, and the Nasdaq only closed down a half of a percent!

    You really can’t make this up.

    The day started gloomily with more fears from rising bond yields.

    Sure, the rising bonds signal a return to normal. But they also signal inflation and rate hikes from the Fed.

    But Powell said “not so fast” and eased market fears.

    “Once we get this pandemic under control, we could be getting through this much more quickly than we had feared, and that would be terrific, but the job is not done,” Powell said.

    He also alluded to the Fed maintaining its commitment to buy at least $120 billion a month in U.S. Treasuries and agency mortgage-backed securities until “substantial further progress is made with the recovery.

    While the slowdown (I’d stop short of calling it a “downturn”) we’ve seen lately, namely with the Nasdaq, poses some desirable buying opportunities, there still could be some short-term pressure on stocks. That correction I’ve been calling for weeks may have potentially started, despite the sharp reversal we saw today.

    Yes, we may see more green this week. But while I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.

    Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”

    With more earnings on tap for this week with Nvidia (NVDA) on Wednesday (Feb. 24) and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25), buckle up.

    The rest of this week could get very interesting.

    Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.

    A correction could also be an excellent buying opportunity for what could be a great second half of the year.

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    Nasdaq- To Buy or Not to Buy?

    Figure 1- Nasdaq Composite Index $COMP

    What a difference a few weeks can make!

    Before, I was talking about the Nasdaq’s RSI and to watch out if it exceeds 70.

    Now? As tracked by the Invesco QQQ ETF, the Nasdaq has plummeted by 4.5% since February 12 and is trending towards oversold levels! I hate to say I’m excited about this recent decline, but I am. This has been long overdue, and I’m sort of disappointed it didn’t end the day lower.

    Now THAT would’ve been a legit buying opportunity.

    While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony. Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?

    Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after today, I feel more confident in the Nasdaq as a SHORT-TERM BUY.

    But remember. The RSI is king for the Nasdaq. If it pops over 70 again, that makes it a SELL in my book.

    Why?

    Because the Nasdaq is trading in a precise pattern.

    In the past few months, when the Nasdaq has exceeded 70, it has consistently sold off.

    • December 9- exceeded an RSI of 70 and briefly pulled back.
    • January 4- exceeded a 70 RSI just before the new year and declined 1.47%.
    • January 11- declined by 1.45% after exceeding a 70 RSI.
    • Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.

    I like that the Nasdaq is below the 13500-level, and especially that it’s below its 50-day moving average now. I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

    But the pullback hasn’t been enough.

    Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.

    For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

    For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

  • The Yield Harbinger for Stocks

    February 22, 2021, 9:08 AM

    Indices, for the most part, closed fractionally higher to end the week. But a new headwind for stocks could be more concerning - rising bond yields.

    That correction I’ve been calling for weeks could have potentially started.

    While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.

    Bank of America also echoed this statement and said last week that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”

    But rather than looking at the past, let’s take a look at what’s on tap this week to get you ready for what could potentially be a volatile week ahead.

    This coming week, be on the lookout for the January leading indicator index, durable goods orders, and personal income and spending.

    On Tuesday, we will also receive the February Consumer Confidence Index; on Wednesday, the Census Bureau will release upcoming home sales. On Friday, the University of Michigan will release its Consumer Sentiment Index.

    Of course, as we’ve seen in weeks past, jobless claims from the previous week will be announced on Thursday too. After outperforming the last few weeks, the jobless claims announced last Thursday (Feb. 18) grossly underperformed and reached their worst levels in nearly a month.

    Earnings season has been outstanding but is winding down now. Be on the lookout this week for earnings from Royal Caribbean (RCL) on Monday (Feb. 22), Square (SQ) on Tuesday (Feb. 23), Nvidia (NVDA) on Wednesday (Feb. 24), and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25).

    We have the makings of a volatile week, and as I mentioned before, a possible correction.

    Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.

    While it won’t happen for sure, I feel like it’s inevitable because of how much we have surged over the last few months.

    A correction could also be an excellent buying opportunity for what could be a great second half of the year.

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    Will the Russell 2000 Overheat Again?

    Figure 1- iShares Russell 2000 ETF (IWM)

    The Russell 2000 popped on Friday (Feb. 19) after seeing a bit of a pullback since February 9. Between February 9 and the close on February 18, the Russell 2000 lagged behind the other indices after significantly overheating. I switched my call to a SELL then on the 9th, and it promptly declined by 3.40% before Friday’s session.

    I foresaw the pullback but cautiously saw a rally and switched to a HOLD call before it popped over 2% on Friday (Feb. 19).

    I do love small-caps for 2021, and I liked the decline before Friday. However, I feel like the index needs a minimum decline of 5% from its highs before switching it to a BUY.

    As tracked by the iShares Russell 2000 ETF (IWM), small-cap stocks have been on a rampage since November.

    Since the market’s close on October 30, the IWM has gained nearly 47.56% and more than doubled ETFs’ returns tracking the larger indices. If you thought that the Nasdaq was red hot and frothy, you have no idea about the Russell 2000.

    Not to mention, year-to-date, it’s already up a staggering 16.38%.

    It pains me not to recommend you to BUY the Russell just yet. I love this index’s outlook for 2021. Aggressive stimulus, friendly policies, and a reopening world could bode well for small-caps. Consumer spending, especially for small-caps, could be very pent-up as well.

    But we just need to hold on and wait for it to cool down just a little bit more for a better entry point.

    HOLD. If and when there is a deeper pullback, BUY for the long-term recovery.

    For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

  • For Stocks, Has the “Rational Bubble” Popped?

    February 19, 2021, 9:10 AM

    The market has continued to mainly trade sideways this week. However, the correction I’ve been calling for weeks has potentially started.


    While I don’t foresee a crash like we saw last March, and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.

    Bank of America also echoed this statement and said last week that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”

    Yes, the sentiment is still positive. That won’t change overnight. Vaccines seem more effective than we thought, especially against other variants of the virus. All that extra stimulus money and record low-interest rates could keep pushing stocks to more records and stimulate pent-up consumer spending. It’s not like the Fed is going to switch this policy up anytime soon, either.

    They don’t call it a stimulus for nothing.

    For weeks we’ve likely been in a rational bubble. Dhaval Joshi, the chief European investment strategist for BCA Research, has said that low bond yields meant the rally we’ve seen with stocks made sense.

    “Rational, because the nosebleed valuations are justified by a fundamental driver. And not just any fundamental driver, but the most fundamental driver of all – the bond yield.”

    Take a look at this chart comparing a “rational bubble” to an “irrational bubble.”

    Figure 1

    But now? Things have possibly changed. Complacency, valuations, surging bond yields, and inflation concern me.

    They’re all connected. But look especially into the 10-year yield. It’s hovering around 1.30% for the first time in over a year.

    Why is this concerning?

    Rising interest rates=less attractive stocks.

    Look at this other chart. Forward P/E ratios are continuing to rise along with bond yields. In high-growth sectors, such as tech, this is especially concerning. The chart shows, in fact, that tech earnings yields have now been surpassed by the bond yield plus a fixed amount.

    Figure 2

    The only three ways this can be resolved are for stock prices to decline, bond yields to fall, or earnings to rise and improve stock valuations. Considering earnings season is over, only options 1 or 2 seem feasible in the near-term.

    You combine this info with the Buffet Indicator (Total US stock market valuation/GDP), and you have a market that could be 228% overvalued.

    I’ve already correctly called the Russell 2000’s pullback after how much it’s overheated. Since February 9th, when I switched the call to a sell, it’s declined roughly 3.40%.

    More could follow.

    Look. Corrections are healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.

    A correction could also be an excellent buying opportunity for what could be a great second half of the year.

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    A Needed Cool Down for the Russell 2000

    Figure 3

    Since February 9, the Russell 2000 small-cap index has lagged behind the other indices after significantly overheating. I switched my call to a SELL then, and it promptly declined by 3.40%.

    I do love small-caps for 2021, though, and I really like this decline. If it declines about another 1.50%, I’d feel more confident switching the call to a BUY.

    As tracked by the iShares Russell 2000 ETF (IWM), small-cap stocks have been on a rampage since November.

    Since the market’s close on October 30, the IWM has gained nearly 44.5% and more than doubled ETFs’ returns tracking the larger indices. If you thought that the Nasdaq was red hot and frothy, you have no idea about the Russell 2000.

    Not to mention, year-to-date, it’s already up a staggering 14%.

    Judging from these types of returns, the IWM’s decline since February 9 is hardly shocking. But for me, it’s still not enough, outside of switching the call to a HOLD.

    It pains me not to recommend you to BUY the Russell just yet. I love this index’s outlook for 2021. Aggressive stimulus, friendly policies, and a reopening world could bode well for small-caps. Consumer spending, especially for small-caps, could be very pent-up as well.

    But we need to just hold on and wait for it to cool down just a little bit more for a better entry point.

    HOLD. If and when there is a deeper pullback, BUY for the long-term recovery.

    For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

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