While the exact definition of small-cap stocks can vary from brokerage house to brokerage house, small-cap stocks usually have stock market capitalization of less than $1.0 billion, but more than $400 million. Small-cap stocks sometimes see their stock market capitalization eventually exceed $1.0 billion, at which point they become large-cap stocks.
A look at the charts makes me a bit nervous that the next stock market crash could be on the horizon. The fact is that the market has not witnessed a correction of any major proportions in excess of 10% since the stock market began to turn up in March 2009. Sure, we have had the occasional five-percent adjustments in stocks, but these periods of selling were short-lived, always followed by periods of buying support. I suspect we could be on the verge of another correction that could drive the major stock indices down to test their respective 200-day moving averages (MAs) after already breaching the key short-term 50-day MA. While we would all love to see stocks continue to creep to new record highs, this is not ... Read More
You can't blame newly installed McDonald's Corp. (NYSE/MCD) CEO Steve Easterbrook for not being enthusiastic about the fast food restaurant stock. I’m certainly not; you can see my negative view towards the seller of the “Big Mac” here. Even after Easterbrook's new strategy to turn things around, you can’t get angry at me for not getting too excited. (And then there’s YUM! Brands, Inc., which is looking pretty darn good in comparison—but more on that later.)
McDonald’s New Strategy Not Doing Much for OperationsWhat is McDonald’s doing to try to turn t ... Read More
I no longer own an “iPhone” and I don't have plans anytime soon to order the “Watch,” a smartwatch from Apple Inc. (NASDAQ/AAPL). Yet despite my personal needs, I do think Apple is the king of the mountain in the stock market’s technology space. Some are suggesting the iPhone will eventually meet its match, but I have yet to see this. Apple sold something like 74.5 million iPhones in its first quarter. This a huge number, and it could get even better if existing users of older iPhones decide to stay. I didn't; I switched to the “Samsung Galaxy,” which I feel is a comparable alternative to the iPhone. But this is not about my personal taste. The reality is that Apple ha ... Read More
Some say Alibaba Group Holding Limited (NYSE/BABA) is the Google Inc. (NASDAQ/ GOOG) of China. And that is currently the case at this juncture...until Google can gain a foothold in the country’s Internet technology sector. But that will not be easy. Comparing Alibaba to Google in the technology sector at this time is difficult. If we could fast-forward a few years, the answer to which Internet starlet is a better choice would likely be clearer. Google is currently nearly twice as big as Alibaba based on market capitalization. This on its own doesn’t mean that Google is superior; however, I will explain why I think it may indeed be the better choice now in the Internet technology ... Read More
Why the Restaurant SectorThis may be a surprise to you, but one of the top-performing sectors over the past few years has been the restaurant sector. While there has clearly been some euphoric buying, the fact that we are seeing stronger job growth and rising home wealth in the U.S. has helped as well. If you look at the chart of the Dow Jones U.S. Restaurants & Bars Index, you can see the upward moves, highlighted by several breakouts along the way, including the recent breakout from the sideways channel. I doubt the gains ahead will be as dynamic for the restaurant sector, but there will continue to be opportunities to accumulate stocks on price weakness.
If you haven’t already done so, you should start to take a closer look at small-cap stocks.
Small-Cap Stocks Outperforming in 2015While small companies underperformed in 2014 with the Russell 2000 gaining a mere 3.53%, compared to the 13.40% and 11.41% advances by the NASDAQ and S&P 500, respectively, I believe that as the long as the economic renewal holds, small-cap stocks could turn things around this year. So far in 2015, small-cap stocks are second only to the technology sector. The Russell 2000 is up 2.10% as of Thursday, versus a 4.88% move by the NASDAQ. At this time, small-cap stocks are beating the S&P 500 and DOW; it’s still early on, but it’s looking good coming off of a soft ye ... Read More
I will be formulating my complete stock market outlook for 2015 in a couple weeks, but at this time, I’m feeling somewhat uneasy. This year has turned out to be what I was expecting back in January 2014, with stock market trading being characterized by uncertainty and hurdles. Small-cap stocks are heading for their worst performance since 2011, when the Russell 2000 fell just below six percent. The index is languishing, with a loss of one percent after the nasty down week we just experienced. The selling was, in my view, somewhat driven by panic selling and capitulation. It gave stock market investors reasons to dump positions and take profits prior to year-end. The s ... Read More
One of the key tenets to success in the stock market, as I have learned from more than 20 years of trading, is the need to make sure you have a system in place to actively monitor your outstanding positions. Any major changes to the underlying fundamentals are critical. Unless you invest in mutual funds or are happy with a buy-and-hold strategy, ignoring your positions is not prudent and will likely result in damage to your portfolio—and maybe even your quality of life. In early October, when the Russell 2000 and the NASDAQ were down 14% and 100%, respectively, the thing to do was not to rush to the exits and liquidate everything. Making rash ... Read More
The world is not coming to an end—even if it does look that way as global stock markets plummet. Make no mistake about it; we are clearly witnessing some selling capitulation in the stock market. The bottom may be near for the stock market, or we could be in for further downside moves given that the correction on the S&P 500 has been around six percent, so there’s some wiggle room to the downside. After multiple records by the S&P 500 and DOW in September, the DOW is now in negative territory in 2014. Meanwhile, the S&P 500 was negative intraday on Wednesday pri ... Read More