Whoopsies, daisies. The Russell 2000 (RUT; the small caps) slips negative on the year. RUT begins 2020 at 1668.47 and price is now at 1662.23 a loss of 6 points. The Russell 2000 Small Cap Index is down -0.4% thus far in 2020.
Small caps are moving inversely to the dollar as seen in the charts above. Analysts and strategists continue to call for the demise of the dollar but alas, paraphrasing Twain, 'rumors of the dollar's demise are greatly exaggerated'. The greenback rallies out of the gate this year and does not take a breath until 1/9/20 and 1/10/20. The dollar retreats for five days, which is reflected by that bump higher in the RUT chart above, but then the dollar gaps higher resuming the uptrend with USD, or DXY, dixie, now up to 97.65. The Russell pukes 23 points on Friday, -1.4%, to 1662.
Another reason for the disappointing performance in small caps is the drop in IPO's this week. ZM zooms lower down -3.4% this week. APRN continues to be a bloody apron crashing -12%. CRWD is crushed -7%. RVLV is shot with a revolver crashing -16%. MDLA is awarded a bear medallion after dropping -3.6%. WORK is punished -8.3%; it's slacking off instead of working. PTON loses -4% so Peloton Wife needs to start pedaling faster.
The bull market party rages on with traders singing songs and buying stocks without a care in the world. Friday is a pullback but the Fed will likely be active next week and the dip-buyers may nibble. No matter what happens in the markets, traders, strategists and analysts view things optimistically. The glass is always half-full. Of course they are wired that way since funds do not attract new money if the analysts are Gloomy Gus's and Negative Nancy's. People want to hear optimistic happy talk so they give them what they want to hear to attract more money into the fund. Same for the business channels. They steer clear of bearish talk since that is a downer. Advertisers paying big fees for commercial time want to hear the talking head news commentators spout happy upbeat talk and that is what the business channels shell out.
The new moon peaked at 4:42 PM EST yesterday afternoon after the market close so it makes sense that stocks were soggy; they usually are moving through the new moon, the darkest time of the month. In the coming days, we shall see if any covert raids are carried out around the world or if the quakes or volcanos become more active.
The RUT needs a weaker dollar to move higher. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note: The upper chart is provided by Yahoo Finance and the lower chart by StockCharts and both are annotated by Keystone.
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