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Markets are going wild, but small-cap stocks are holding up — here's the next move

The markets received a volatility injection in the last week, and small-cap stocks are no exception. But one market strategist is arguing that on a technical basis, the Russell 2000 index is holding up well relative to its large-cap peers and is well-positioned going forward.

While the Dow Jones industrial average, S&P 500 and Nasdaq Composite have all fallen around 5 percent in the last week, the small-cap stock index has declined a little more than 4 percent. On Wednesday, the Russell 2000 closed the day barely positive while the Nasdaq Composite, S&P 500 and Dow all closed in the red.

Matt Maley, equity strategist at Miller Tabak, said the Russell 2000 should be positioned to outperform. Here are his reasons.

• The small-cap index is generally composed of domestically centered companies, which makes it particularly sensitive to moves in the U.S. dollar index.

• After a 14-month decline, the dollar index is finally starting to see a bit of a bounce. This comes on the heels of extremely oversold conditions, and sentiment has become quite bearish around the greenback.

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MARKET SUMMARY

INDICES

Name Last Change
DOW 25444.30 0.26%
S&P 500 2767.78 0.04%
NASDAQ 7449.03 0.48%
TSX 15470.10 0.43%
TSX-V 682.16 0.00%
RTY 1542.04 1.21%

Technology

Name Last Change
APPL 219.31 1.50%
GOOG 1096.46 0.77%

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