This report will be a short
one, since not much has changed our outlook since last week’s alert.
We started the week with decent
gains on Monday and Tuesday only to spend the next three days giving back all
the gains and then some. We have a clear bifurcated market where the
largest losses are again in the riskier smaller cap stocks and safer sectors
like tobacco and utilities are doing well.
The Russell 2000 lost 1.2% for
the week, while the Dow only lost 0.3%. Depending on where you are
invested, you probably have a very different outlook, with the Russell 2000 and
Nasdaq down over 7% from the high made in early march, while the Dow and
S&P 500 are only down 2%.
Although the pain has been
minimized in the larger stocks, this ‘split’ market isn’t a great sign for the
longer term outlook. Each time the Nasdaq takes a hit like it did today (down
1.7% for the day), it chips away at the confidence of the bulls which over time
can cause them to be more cautious keeping their money on the sidelines.
Eventually with this lack of demand, will have a wide spread effect … OR
hopefully enough time will go by that institutional investors will decide to
start investing again which will allow the market to move up.
As I have said for a few weeks
now, with the current uncertainty in the market and lack of demand, the best
place to be is on the sidelines, protected. Until the Nasdaq and
smaller-caps take part in the recovery, we quite possibly have more downside to
experience.
Hope you have a wonderful and safe weekend.
Respectfully,
Randall Mauro
Resnn Investments, LLC
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