It’s time to jump back into small cap stocks and ETFs such as the iShares Russell 2000 ETF (IWO), which is starting to show signs of life again.
At the moment, small caps are getting hit because the economy is showing signs of softening, which can hurt small cap profits. These companies are also paying high levels of interest payments on debt because of floating rate debt. So, they’re getting hit on both sides.
All of which is a sharp reversal from the gains seen after the November election, with small caps viewed as strong beneficiaries of deregulation, lower tax rates and even tariff.
After all, the group has less exposure to international issues than larger cap stocks.
The good news is that a good chunk of negativity has been priced into small cap names.
Plus, “Small caps, in the first half of an economic recession, are usually down 13%, so it’s already worse than where we were for the average recession,” said Steven DeSanctis, an equity strategist covering small- and mid-cap companies at Jefferies, in an interview with CNBC. “For the average bear market, small caps are down 26%, so we’re nearing that number.”
Markets Are Also Betting on Interest Rate Cuts
With the Federal Reserve being pressured into lower interest rates, markets have been aggressively betting on cuts starting by June.
Should that happen, small caps could be some of the biggest beneficiaries. That’s because a lower rate would reduce interest expenses on debt.
According to Yahoo Finance, “Traders boosted their bets on the number of Fed cuts this year to five and pulled forward their estimate of when those cuts could begin, starting at the next meeting on May 6-7. The odds of a May cut are now above 50%.”
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly,” said President Trump, adding, “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
In short, with a good deal of negativity priced in, small caps offer opportunity.
With so much negativity already priced in — and interest rate cuts on the horizon — small caps could be gearing up for a major rally. In fact, some powerful bullish signals are already starting to flash…
New bullish indicator is flashing green on 3 stocks right now!
This bullish bar fills up on a few stocks every day.
And when it fills up, it means the stock could go WAY higher.
For example, look what happened just recently…
At 8:45 am on December 19th…
The Money Bar started to fill up for Trio Petroleum Corp (TPET)…
…355% peak move by 10 am!
Think of it like a “bullish fuel” meter…
That shows you which stocks have the highest potential for breakout moves in real-time.
And according to the bar, 3 little known stocks are filled to the brim with bullish fuel RIGHT NOW.
And that can only mean one thing…
Write these 3 tickers down before they explode!
Hurry, before you miss today’s biggest stock moves…
P.S. This has nothing to do with AI—Instead, it measures a little known metric that determines how HIGH stocks can go. Watch this video to see why it’s so predictive.
