They say small caps names are often a good leading indicator, one for their nimble ability to move quickly unlike, their larger cap cousins. Below is a chart of the Russell 2000, and two takeaways are that it is primarily a domestic index. If this is the case why the underperformance if the economy is so strong? Pundits will point out its large exposure to financials as the reason, a group that is acting poorly. That gets into our second point, that the third largest group representing the index is technology, just behind healthcare, at 15.4%. Why is it not keeping pace with the strongest sector YTD? No one knows and that is a good reason to follow PRICE action. For the last month it has traded between the round 1500-1600 figures. Whichever number it breaks from should have market consequences.
AAPL will play a big role into the direction of the Nasdaq, and therefore the overall markets, IF it can break free decisively from its 200 day SMA. It did just that on 3/23, yet the very next session recorded a bearish dark cloud cover. This week did not do much to inspire the bull or bear camp, although the lack of follow through after the break above the long term secular line should be a bit concerning to the bulls. The chart did record a doji candle today and Wednesday, which tends to indicate exhaustion of the prevailing trend (produced a 39.2% move from the 12/24/18 lows), although it did that on 2/25, 3/4 and again on 3/14. There is no rush, let the potential scenario play out and exhibit patience in the meantime.
The chatter about IPOs going forward should hit a fevered pace going forward of course with Lyft today and Uber and Pinterest not long after. Some recent names should never have come public, APRN or FRTA come to mind. Below is the chart of another one of EB and how it appeared in our 3/25 Technology Report. This name is now 52% off most recent highs, since hitting highs right at the round 40 number on 9/26/18, and is on a current 4 week losing streak, showing awful relative strength this week slumping nearly 10%.