Momentum Monday – Small Caps Are Waking Up

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Three developments stood out last week:

1. The small-cap index, Russell 2000 had a big breakout. Small caps are trying to catch up with large caps, which many of which have been making new all-time highs every week in the past three months. For Russell 2000 to catch up with the S&P 500 and the Nasdaq 100, it will need some heavy lifting from energy and financial stocks which are still lagging for the most part.

2. The highest-shorted stocks outperformed again. So many stocks with high short interest continue to squeeze higher: CGC, TLRY, TSLA, LK, PETS, SHAK. Some potential candidates for the next week: DDOG, PTON, INMD, STNE.

3. The earnings season has just begun. So far, a few big banks and a few semiconductor companies reported. Starting next week, it gets a lot more interesting as companies like NFLX, SBUX, INTC, and TEAM.

We also talked about the impact of tariffs on semiconductors and why AMZN is lagging the other mega caps.

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