Nov. 28, 2015, 9:42 AM
- Looking for an edge on when it might be profitable to rotate into small-caps, Nomura quants Joe Mezrich and Adam Gould watch three factors: 1) Their cheapness relative to large-caps; 2) economic uncertainty as measured by the dispersion of earnings estimates for the S&P 500; 3) expectations for economic growth as indicated by the yield curve.
- SInce 1980, the alignment of these factors pointed to small-cap outperformance over the subsequent three months worth an annualized average of 7.6%. Trying the strategy live for two years - long Russell 2000/short Russell 1000 when things look good for small-caps, and the opposite otherwise - has produced a 10% annualized return vs. a passive long position in small-caps which lost 5%.
- The team's signals suggested a good three months for small caps starting in November, and it's already working - the FTSE Russell 2000 is outperforming the Russell 1000 by nearly 300 basis points this month. There's still another two months to get small.
- Source: Bill Alpert in Barron's
- ETFs: IWM, TZA, TNA, UWM, VB, IJR, SLY, RWJ, URTY, SCHA, TWM, RWM, SRTY, VTWO, SAA, VIOO, SDD, SBB, JKJ, RSCO, TWOK, FYX, EWRS, ZSML, LLSC, SMLL, RYRSX
Sep. 27, 2015, 8:59 AM
- The $8B iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) fell 4.9% on Friday and 13% for the week - its worst weekly performance since the height of the financial panic seven years ago. Many biotech ETFs eat the same cooking - Gilead (NASDAQ:GILD), Amgen (NASDAQ:AMGN), Biogen (NASDAQ:BIIB), and Regeneron (NASDAQ:REGN) among the popular names - and FBT, XBI, and BBP fell in amounts similar to IBB.
- The news flow was relatively quiet late in the week, but Hilary Clinton's promise Monday to clamp down on drug prices set things in negative motion for the momo sector.
- Barron's Chris Dieterich reminds that a flood of biotech IPOs in recent years has filled the small cap universe with these highly speculative names, and biotech now makes up 7% of the iShares Russell 2000 Index (NYSEARCA:IWM). Indeed. The IWM fell 3.7% for the week, nearly tripling the decline of the S&P 500.
- ETFs: IWM, TZA, TNA, UWM, VB, VBK, URTY, SCHA, TWM, IWO, RWM, SRTY, VTWO, RCG, JKJ, VTWG, TWOK, FYX, JKK, EWRS, ZSML, FYC, SMLL, RYRSX
Sep. 10, 2015, 12:39 PM
- The CBEO Russell 2000 Volatility Index has dipped to 26.33, while the CBOE Volatility Index (VIXX) has risen to 26.51.
- Pick your reason, but the fact that small caps tend to do more business at home vs. the more multinational large-caps makes for as good of an excuse as any.
- The upshot, however, is of more import: Those itching to buy protection (or play for a bull market), may want to look at what are now relatively cheap options on the IWM rather than on the S&P 500.
- Source: Barron's
- ETFs: IWM, TZA, TNA, UWM, VB, IJR, VBR, SLY, EES, RWJ, VBK, URTY, SCHA, TWM, RVT, RWM, SRTY, VTWO, SAA, JKL, VXX, UVXY, TVIX, XIV, SVXY, VIXY, ZIV, VXZ, VIXM, CVOL, VIIX, XVZ, XXV, XVIX, TVIZ, IVOP, VIIZ, VXUP, VXDN
Feb. 2, 2015, 5:35 PM
Oct. 15, 2014, 3:08 PM
- Way out in front on the way down, might the Russell 2000 (IWM -0.4%) lead the path back up? An afternoon move higher has the small-cap index down just 0.25% after being off nearly 2%.
- The Dow (NYSEARCA:DIA) has moved 170 points off of its low, now down 1.6%, and the Nasdaq 100 (NASDAQ:QQQ) - lower by nearly 3% at one point - is off just 1.25%.
- Small-cap ETFs: IWM, TZA, TNA, IWC, UWM, VB, IJR, SLY, RWJ, URTY, SCHA, TWM, RWM, SRTY, SAA, DWAS, VTWO, VIOO, SDD, PZI, SBB, FDM, RSCO, JKJ, WMCR, FYX, EWRS, XSLV, TWOK, SMLV, PXSC, CSF
Oct. 13, 2014, 1:33 PM
- Electronic Cigarettes International Group, Ltd. (OTCQB:ECIG) is set for its IPO of 33.3M shares of common stock at a prospective price of $4.50 per share. The firm is selling 28,443,133 shares and selling shareholders are offering 4,890,200.
- The company markets and distributes electronic cigarettes and accessories through over 50K outlets in multiple countries.
- Proforma 2013 financials: Revenues: $113.2M; Gross Profit: $55.5M; Operating Expenses: $48.9M; Operating Income: $6.5M; Net Loss: ($11.4M); Loss Per Share: ($0.11).
- Proforma 1H 2014 financials: Revenues: $48.5M; Gross Profit: $26.8M; Operating Expenses: $57.9M; Operating Loss: ($31.1M); Net Loss: ($10.5M); Loss Per Share: (0.08).
- Actual 1H 2014 financials: Revenues: $15.4M (+862.5%); Gross Profit: $8.2M (+780.1%); Operating Expenses: $92.8M (-999%); Operating Loss: ($84.6M); Net Loss: ($84.5M); Loss Per Share: ($1.23); Quick Assets: $5.6M (+166.7%); Cash Burn Ops: ($10.9M) (-999%).
- The company expects Q3 2014 revenues to be $16M - 17M (pro forma net $22.9M - 24.3M).
- ETFs: IWM, TZA, TNA, IWC, UWM, VB, IJR, SLY, RWJ, VBK, URTY, SCHA, TWM, IWO, RWM, IJT, SRTY, SAA, DWAS, VTWO, SLYG, VIOO, SDD, RZG, PZI, SBB, RSCO, FDM, JKJ, UKK, VTWG, VIOG, WMCR, FYX, EWRS, XSLV, TWOK, SKK, JKK, SMLV, PXSG, FYC, PXSC, CSF
- ETFs: IRY, IXJ (IPO -0.5%)
Oct. 12, 2014, 7:57 PM
- There's no bounce yet from last week's steep decline as S&P 500, Nasdaq 100 and DJIA futures are all lower by 0.5% and the Russell 2000 by 0.9%.
- Money continues to flow into fixed income, with the 10-year Treasury yield down three basis points to 2.28%, and gold is higher by $10 per ounce to $1,232.
- Speaking at the IMF's annual meeting over the weekend, new Federal Reserve Vice Chairman Stanley Fischer warned of "further bouts of volatility" as markets come to grips with the idea of the Fed's first rate hike since 2006, but he doesn't expect tighter monetary policy in the States to damage the international economy.
- ETFs: SPY, QQQ, SH, DIA, IWM, TZA, TNA, SSO, SDS, VOO, PSQ, IVV, SPXU, UPRO, UWM, TQQQ, SPXL, RSP, QID, SQQQ, DOG, QLD, DXD, RWL, EPS, URTY, UDOW, TWM, SDOW, DDM, RWM, SRTY, BXUB, VTWO, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, EWRS, TWOK, SPUU
Oct. 9, 2014, 4:13 PM
- Today's 2.6% decline in the Russell 2000 (NYSEARCA:IWM) stands against 2% drops in the S&P 500 and Nasdaq; the small-cap index is now off 8.1% YTD, and lagging the S&P 500 by 1,230 basis points.
- The Russell has now also moved into negative territory on a year-over-year basis.
- ETFs: IWM, TZA, TNA, UWM, URTY, TWM, IWN, IWO, RWM, SRTY, VTWO, UKK, VTWG, EWRS, TWOK, VTWV, SKK, UVT, SJH
Oct. 1, 2014, 3:52 PM
- Today's decline in the Russell 2000 (IWM -1.4%) puts it more than 10% below the level hit in March (and in July). The index fell 6% in September alone.
- For the year, the Russell is lower by 6.6% after gaining nearly 40% in 2013.
- As rough as it's been, it's the divergence with large caps which looks like the bigger story - while the small caps have fallen 10% during their correction, the S&P 500 is flat, and only in the last two weeks beginning to move in lockstep with the Russell.
- For the year, the S&P 500 is up 5.4%, about 1,200 basis points ahead of the Russell, and on a year-over-year basis, the S&P's 15% gain is 1,500 basis points faster than the Russell.
- ETFs: IWM, TZA, TNA, UWM, VB, VBR, EES, VBK, URTY, SCHA, TWM, IWN, IWO, RWM, SRTY, VTWO, JKL, JKJ, TILT, UKK, VTWG, FYX, FYT, EWRS, TWOK, SKK, VTWV, JKK, UVT, SJH, IESM, VLU, FYC
Sep. 19, 2014, 2:41 PM
- There's not a lot of action in the large cap averages this session, but the Russell 2000 (IWM -1.1%) continues to shed ground both absolutely and relative to the S&P 500, and has now turned negative for the year - it's lower by 1.1% YTD, ceding about 1000 basis points to the S&P,
- Maybe bearish, but probably bullish for those with a contrarian streak, technicians are starting to warn about the dreaded "Death Cross" - the 50-day moving average moving below the 200-day moving average. Ryan Detrick points out 19 instances since 1988 where the Russell 2000 has completed a Death Cross - it's tended to be bearish in the very short-term, but bullish over longer periods.
- ETFs: IWM, TZA, TNA, IWC, UWM, VB, IJR, SLY, RWJ, URTY, SCHA, TWM, RWM, SRTY, SAA, DWAS, VTWO, VIOO, SDD, SBB, PZI, FDM, JKJ, RSCO, WMCR, XSLV, FYX, EWRS, TWOK, SMLV, PXSC, CSF
Sep. 5, 2014, 2:44 PM
- The costs are high and volatility - at the moment - is about nonexistent, so the institutions which use leveraged funds to hedge may not feel it's worth it anymore. While broad-market volume is lower - trading in the SPRD S&P 500 fund is down 13.8% from a year ago - volumes in leveraged funds are off 25-30%.
- What's more, these vehicles are not exactly buy and put away - they're designed for one-day holdings, meaning traders are paying double the commissions and fees, further eating up any possible profit.
- A few popular ones hit by the lessened interest: SSO, SDS, TNA, TZA.
Aug. 22, 2014, 5:58 AM
- London Stock Exchange (OTCPK:LDNXF) has announced that it is looking to raise £938M ($1.6B) to part fund the acquisition of stock index unit Frank Russell.
- LSE will offer 74,347,813 new shares at a price of 1,295 pence, a 30.1% percent discount to yesterday's closing price.
- The deal would give London Stock Exchange third place in the booming ETF market, behind market leaders S&P Dow Jones and MSCI.
- Russell ETFs: IWM, TZA, TNA, UWM, SPXS, IWF, SKF, URTY, IWD, TWM, IWO, IWN, RWM, SRTY, IWV, IWB, VTWO, VONE, IWW, IWZ, VTWG, UKK, ROLA, RTLA, FBG, THRK, UKF, SKK, EWRS, ONEK, TWOK, VTHR, VONG, VTWV, SMLV, UVT, VONV, UVG, EWRI, SJH, UWC, LGLV, TWQ, SJF, FIBG
Jul. 28, 2014, 12:48 PM
- The Direxion Daily Mid Cap Bull 2X Shares (Pending:MDLL) and Direxion Daily Small Cap Bull (Pending:SMLL) will offer investors leveraged exposure to their respective market caps.
- Both funds will have an expense ratio of 0.66%, making them relatively inexpensive compared to many leveraged equity ETFs.
- The Direxion 7-10 Year Treasury Bull 2X Shares (Pending:SYTL) will offer investors leveraged exposure to intermediate-term U.S. Treasury bonds, while charging an expense ratio of just 0.65%.
- Other Russell 2000 ETFs: IWM, TZA, TNA, UWM, URTY, TWM, RWM, SRTY, VTWO, EWRS, TWOK
- Other S&P 400 ETFs: MDY, MVV, IJH, RWK, UMDD, IVOO, MZZ, SMDD, MYY
- Other Intermediate Treasury ETFs: IEF, PST, IEI, DTYS, TYO, UST, VGIT, TBX, GSY, SCHR, DTYL, ITE, TYD, TBZ, DFVL, FIVZ, DFVS, TYNS
Jul. 25, 2014, 2:31 PM
- Hammering away at the misconception that it pays to seek active managers in supposedly "less efficient" sectors like small caps, S&P Dow Jones' Philip Murphy finds - even choosing among the top mutual fund share classes - an alarmingly small number of managers failed to beat the benchmarks.
- Starting at the March 2009 bottom and going out five years, only 9 of 139 share classes beat the S&P SmallCap 600 benchmark (that's 5.9% of the starting set).
- Where alpha might be able to be delivered though, is in choosing which benchmark to track. A fund tracking the S&P SmallCap 600 (IJR, VIOO) would have outperformed one tracking the Russell 2000 (NYSEARCA:IWM) by 23% over the 5-year period.
- ETFs: IWM, TZA, IJS, TNA, IWC, UWM, VB, IJR, SLY, VBR, EES, RWJ, VBK, URTY, SCHA, TWM, IWN, IWO, IJT, RWM, SRTY, DWAS, SAA, VTWO, JKL, RZV, SLYG, SLYV, VIOO, SDD, PZI, RZG, FDM, SBB, RSCO, WMCR, VIOG, JKJ, VTWG, UKK, TILT, VIOV, FNDA, XSLV, FYX, FYT, EWRS, JKK, TWOK, SKK, VTWV, PXSV, SMLV, UVT, SJH, IESM, PXSC, VLU, FYC, PXSG
Jul. 10, 2014, 7:12 AM
- S&P 500 (SPY), Nasdaq 100 (QQQ), and DJIA (DIA) futures are all off about 0.9% and Russell 2000 (IWM) down 2% as trouble brews in the EU periphery.
- Banco Espirito Santo - Portugal's largest listed bank - is off another 16% as its parent reportedly considers bankruptcy protection unless a deal can be worked out with creditors. Portugal broad market is down another 4.1%, bringing its 7-session slump to 11%.
- Previously: Portugal tumbles on bank worry
- Europe's Stoxx 50 (FEZ) is down 2%, led by Italy (EWI) -2.5% and Spain (EWP) -2.6%.
- The 10-year U.S. Treasury yield is down four basis points to 2.51% and gold catches a serious bid, up $20 per ounce to $1,344.
- ETFs: SPY, QQQ, SH, DIA, IWM, TZA, TNA, SSO, SDS, PSQ, VOO, IVV, SPXU, UPRO, IWC, UWM, TQQQ, VB, SPXL, QID, RSP, IJR, SQQQ, DOG, SLY, QLD, DXD, RWJ, RWL, URTY, EPS, UDOW, SCHA, TWM, SDOW, DDM, RWM, SRTY, SAA, BXUB, DWAS, VTWO, QQEW, QQQE, VIOO, SDD, SFLA, PZI, FDM, SPLX, QQXT, SBB, BXUC, WMCR, RSCO, JKJ, FYX, XSLV, EWRS, TWOK, SMLV, SPUU, PXSC
Jul. 7, 2014, 1:45 PM
- "Knowingly overpaying never has made sense to me, which I think people are doing," says small-cap fund manager Eric Cinnamond, notable for being up 14.5% at the midway point in 2009 vs. peers' average loss of 27%, but missing out on the bull market of the last three years thanks to his large cash holdings.
- The small cap stocks on his radar are as "expensive as I have ever seen them," he tells the WSJ. "We're just unwilling to overpay with other people's mooney in high-quality, small-cap stocks."
- ETFs: IWM, IJS, TZA, TNA, IWC, UWM, VB, IJR, SLY, VBR, EES, RWJ, URTY, SCHA, TWM, IWN, RWM, SRTY, SAA, DWAS, VTWO, JKL, RZV, SLYV, VIOO, SDD, PZI, FDM, SBB, RSCO, WMCR, JKJ, TILT, VIOV, XSLV, FYX, FNDA, FYT, EWRS, TWOK, VTWV, SMLV, PXSV, UVT, SJH, IESM, PXSC, VLU
The Small Cap Bear 3x Shares seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the price performance of the Russell 2000® ("Small Cap Index"). There is no guarantee the fund will meet its stated investment objective.
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