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MarketSurge powers the charts in this video.

Volatility has picked up significantly lately. It is not the good kind of volatility where you have a range expansion that starts a new uptrend or downtrend. It is the messy kind of volatility where you see frequent reversals and chop – if you don’t take your profits quickly, they disappear. 

Small caps (IWM) began the year extremely strong, reaching 10% YTD by January 22nd. They pulled back 2% on Friday – they were overdue for some type of consolidation. The silver lining is that Russell 2k’s pullback coincided with a rise in Big Tech stocks. Rotations are the essence of durable market uptrends as they keep the excesses in check. 

Silver and gold stocks accelerated their ascent, while the US Dollar is under heavy pressure again. Rare earth metal stocks are off to a strong year – some of them are already on their second upward leg. The next one that is likely to break out is

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MarketSurge powers the charts in this video.

Small caps tend to outperform in the first few weeks of the new year. This is exactly what has happened so far. Russell 2k (IWM) is up 8% year-to-date. The Nasdaq 100 is up 1%. The divergence is significant. We don’t get to see it often. The optimists will say that this is just another sector rotation, and QQQ will likely be the next one to break out as small caps consolidate. This scenario wouldn’t surprise me, but I am also leaning on the cautious side. It doesn’t take a lot of buying power to move small caps when compared to large caps, so seeing pullbacks and fading in the latter is a red flag.

In the meantime, the industries that the government defines as strategically important enough to invest directly in them are clearly leading year-to-date – space, crypto, nuclear, rare earth metals, semiconductors, AI tech, energy infrastructure, and drones. Everything else is choppy and lagging…

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Disclaimer: Everything I share is for educational and informational purposes only, and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

It is no news that small caps tend to outperform in early January. It has happened again this year. Russell 2k (IWM) tested its 50-day moving average on January 2nd, and then it went straight up, making a new all-time high. Also, not surprising – the big lift came from sectors that lagged last year – energy, financials, and beaten down groups like nuclear, robotics, crypto, space, rare earth metals, etc. This basically happens in the first few weeks of almost every year. 

The large-cap indexes, QQQ and SPY, are lagging behind small caps but are also near or at new all-time highs. 

AMZN is pushing higher in anticipation of the Supreme Court decision on tariffs. SHOP might also benefit alongside other retailers. After a brief consolidation, GOOGL broke out to new all-time highs. TSLA tested its 20-week moving average, where it found support. NVDA pulled back to its 20-day moving average, where buyers stepped in. Both are lagging the market indexes but are likely to set up at some point if the market remains strong. 

Memory chip stocks started the new year just like they finished the previous one – leading the market. SNDK is up 800% since last August. MU is only up 200% for the same period.

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