IS THIS SMALL RALLY SUSTAINABLE?

Led by technology companies and small caps equities advanced.  The catalysts were continued reassessment of dovish remarks made by the FRB Chair and optimism surrounding trade talks.

Commenting further about small capitalized issues or aka Main Street America, Bloomberg writes led by energy small caps are marking its best start to a year since 1988.  Bloomberg further writes small caps were up 22.4% for that year versus a high single digit return for the S & P 500.

Four days does not make a trend but after years of languishing, it is comforting to see monies going into the traditional “growth companies” rather than the mega size momentum shares.

In days gone by, historically growth companies were the smaller capitalized entities, not the largest companies in the world as have been the case of the last 7-8 years.   Some would argue it is these mega sized entities that had the stellar growth, a view that is partially correct.  But I ask how much larger can a $750 billion or $1 trillion company become?

What will happen today?

Last night the foreign markets were up.  London was up 0.86%,  Paris up 1.21% and Frankfurt up 0.63%.  China was down 0.26%,  Japan up 0.82% and Hang Sang up 0.15%.

The Dow should open moderately higher as the US expressed optimism that it could reach a “reasonable” deal with China on going trade negotiations.  Oil is up for the seventh consecutive day.  The 10-year is unchanged at 2.70%.

 

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.