For the first time in a while, we saw small caps (IWM) lead the market higher, which is a good sign for 'risk-on' stocks. While the major indices such as the S&P 500, the Dow 30 and the Nasdaq have been grinding higher for huge gains this year, we haven't seen that same love shown to the small caps, as they've been in a major consolidation period for the past two months. With last week's bullish-engulfing weekly candle, it appears the index may be ready to break higher closing just below its major $159 area resistance.
We have a Federal Reserve meeting Wednesday and the market wants to see the Fed continue with its dovish outlook and leave interest rates unchanged throughout the rest of the year. We saw first quarter GDP soar at 3.2% crushing the 2.3% estimates, but that number could largely be due to the lack of Chinese imports, and inflating the number for the short term. We won't be able to see whether that's true or not until the end of Q2.
The IPO market has been going insane the past few months which, in the past, has signaled the end of a huge market run with where we're at in the cycle. Companies want to pump them out with the market at highs in a 'risk-on' environment to increase the probability of a successful IPO. Something to keep in the back of your mind. In the meantime, they can be amazing trading vehicles for our time frame so we will continue to keep a close eye on these names. Great call by Carl in PD Friday, we need more eyes on these fast movers. LYFT has been an utter disaster and UBER just filed to go public in the next week or two, so that will be the big story, but there are a bunch of other IPO winners that haven't been as talked about.
(ZM, PINS, PD, JMIA, TIGR, TPTX to name a few)
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