• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock David and Goliath, or the Small vs. Large Caps
Stock

David and Goliath, or the Small vs. Large Caps

by July 15, 2023
by July 15, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

In the Bible story, David and Goliath represent resilience and overcoming odds. David, a small sheepherder, places a stone in a sling to hurl at Goliath’s head. David gets a clean hit and Goliath falls. David then uses Goliath’s sword to kill and decapitate the giant.

If we look at the small caps and the large caps as seen through the lens of IWM and QQQ, it certainly has similarities to the parable.

Small caps, like David, have had to overcome odds to show resilience. In October 2022, both IWM and QQQs bottomed out. Then, in February 2023, it almost looked like the small caps were ripe to take out the 23-month moving average in blue (or about a 2-year business cycle)… until the commercial bank crisis.

If you are new to the Dailys, I have written extensively on the 2-year cycle as key this year, given the bull run of 2021 and the bear run of 2022. This year, we knew could be pivotal. But is it really?

Once the small caps fell from the key resistance, Goliath woke up. Large caps began to rally, departing from the weakness of the small caps. QQQs kept going and, by May, cleared the 23-month, and off it went. Meanwhile, IWM struggled to hang on to the 80-month or about the 6-to-8-year business cycle low. Except for the COVID crash, IWM has been above the 6-8 year low for over a decade. In fact, we avoided the recession from a technical perspective as not only did that business cycle low hold, but in June the IWM began to run up as well.

Anyway, back to our story. It seemed that, this past week, small caps were once again ripe to run. Of course, NASDAQ has not stopped. After all, technology, according to market sentiment is the savior of everything… but is it really?

Here is where David v. Goliath comes in. Small caps once again ran right to the 23-month moving average and closed the week below it. Now, it may clear it later on this month. If IWM does clear, we think that will take some thunder from the large caps with another rotation to value, but not necessarily the final blow for QQQs. However, if IWM cannot clear, then we can begin to speculate that David has slung the rock at NASDAQ’s giant head. Only this time, they both may fall.

Why might IWM not clear the 23-month MA? Inflation, Fed hikes, bonds back in vogue, poor earnings, consumers cutting back??? Take your pick. It is though, too soon to tell.

But let’s end with a potential stone.

Consumer Staples (XLP).

As this just cleared the 50-daily moving average, a move over 75.00 could indeed signal that the consumer is shifting away from toys, and more towards things they really need.

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

“I grew my money tree and so can you!” – Mish Schneider

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish in the Media

Mish talks her approach to being a professional trader in this Options Insight interview with Imran Lakha.

Nicole Petallides and Mish discuss crypto, basic materials, inflation and gold in this appearance on TD Ameritrade.

Mish and Ash Bennington cover a lot in this video from Real Vision, discussing everything from the Fed, to inflation, to the incredible move in stocks and what is next.

Mish talks day-trading tactics, currency pairs, gold, oil, and sugar futures in this video from CMC Markets.

Mish and Angie Miles talk tech, small caps and one new stock in this appearance on Business First AM.

Mish examines the old adage “Don’t Fight the Fed” in this interview on Business First AM.

Mish and Charles Payne talk the Fed, CPI, Inflation, yields, bonds and sectors she likes on Fox Business’ Making Money with Charles Payne.

Mish, Brad Smith and Diane King Hall discuss and project on topics like earnings, inflation, yield curve and market direction in this appearance on Yahoo Finance.

Mish reviews her first-quarter trades in this appearance on Business First AM.

Mish talks women in the trading space and covers a wide variety of ideas in this interview for FreeFX.

Mish runs through bonds, modern family, commodities ahead of PCE on Benzinga.

Coming Up:

July 21: BNN Bloomberg

ETF Summary

S&P 500 (SPY): 450 pivotal area failed 440 support.Russell 2000 (IWM): 193 is the 23-month holy grail.Dow (DIA): 34,000 pivotal.Nasdaq (QQQ): Great weekly close, so IWM will definitely be key.Regional banks (KRE): 42.00-44.00 range.Semiconductors (SMH): Where Goliath goes, so do semis — another potential reversal top.Transportation (IYT): Under 250, some trouble.Biotechnology (IBB): 121-130 range.Retail (XRT): 65.00 key support for this coming week.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education

You Might Also Like
  • Automate Your Scans with Ease! Sample Scan Library + Scheduled Scans Walkthrough
  • Keeping Up with 3 Key Ratios in a Trading Range
  • AMD Spikes Higher as AI Trade Still Kicking
  • Major Indexes Have Reached Bull Market Perticipation Levels
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Follow the Money! New Earnings Tools + Data as Report Season Kicks Off
next post
Emerging Market Bond Fund ETFs Look Good

You may also like

DP Trading Room: Two Bullish Industry Groups

August 22, 2023

High Risk of Market Downside in December?

December 7, 2023

Sector Spotlight: Strong Rotation to High Beta Sectors

March 7, 2023

Top Ten Charts to Watch in August 2023

July 28, 2023

The Ord Oracle May 2, 2023

May 3, 2023

PG Stock: A Strong Defensive Investment Play

April 7, 2023

The Key to the August Breakouts

September 6, 2023

TOP 10 Stock Picks for May 2024

May 17, 2024

Week Ahead: NIFTY May Stay Subdued Over the Truncated Week;...

April 13, 2024

Watch These Critical Points in MACD Crossover Signals

July 14, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Stock Market Today: How to Scan...

    November 5, 2024

    Week Ahead: Low VIX May Keep...

    September 16, 2023

    Opposite George Week Is Underway!

    July 18, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here