Hey, Ross here:
Hey, Ross here:
It’s a new trading week – but the same story.
Small-caps are dominating right now, but can this last? Read on to find out what I expect.
Chart of the Day
The Russell 2000 index which represents small-cap stocks vastly outperformed the other indexes.
It gained nearly 6% this week with hundreds of stocks surging by double digits.
Momentum in this sector has accelerated thanks to the Fed revealing their plan to cut interest rates at least three times in 2024.
After more than tripling from 1.3% to 5% in two years, bond yields are aggressively falling on this news.
10-year Treasury yields are 110 basis points off their October highs – and are now below 4%. This is prompting an uptick in mortgage applications and will likely lead to an increase in new construction starts.
With the exception of crypto, the best-performing areas of the market right now are all tied to construction – steel, home builders, building products, and banking.
Dream Finders Homes (DFH) is a stock we own in my Alpha Stocks portfolio. It is up 21.5% in just the last two weeks. We also own Eagle Materials (EXP) and are sitting on a 17% open gain in just a few weeks.
But don’t be surprised if the market doesn’t just go straight up – things don’t work that way.
Insight of the Day
Once the market digests this powerful rally, it is poised for a powerful bull market – the likes of which I feel few are prepared for.
As I’ve said time and time again – stocks don’t just go straight up.
Markets need time to digest big moves, and what’s happened in small-cap stocks the past couple of weeks is a prime example of a big move that needs to be digested.
My ideal situation therefore is for a couple weeks of tight trading to finish out the year. This could set up a strong first quarter rally to start 2024 out strong.
That’s why we’ve been taking profits in several of our positions this week. We believe in selling into strength and nailing down gains when they come quickly.
But the bull market is likely just beginning.
After two years of chop, the market is poised for a powerful bull market – the likes of which I feel few are prepared for.
And small-cap stocks are favored to be the biggest winners.
So, if you think the healthy double-digit gains my Alpha Stocks strategy has been posting right now is impressive…
This is likely just the start.
So, if you want to get yourself in the best position possible before the new bull market takes off…
Embrace the surge,
Editor, Stock Surge Daily