We're 27 trading days into 2019, and there's a big difference in the way this year has started from the way 2018 ended. Volatility has slowed considerably, with the S&P 500 closing up or down at least 1% on just six trading days so far this year, which is in stark contrast to 28 such occurrences in 63 trading days in the fourth quarter.
The first quarter of 2019 is less than half over, so there are plenty of unknowns ahead. So far, though, the S&P 500 very quietly has bounded ahead 8%, on nickels and dimes. The only really big days so far were Jan. 3 (down 2.5%) and Jan. 4 (up 3.4%), which looked like the continuation of a crazy fourth quarter, but it has been fairly quiet since then.
Smaller names continue their recovery, albeit at a slower pace, from an awful fourth quarter that saw the Russell 2000 Index down 20%, and the Russell Microcap Index down 22%. Through last Friday, the former was up 11.8% year to date, and the latter up 11.2%, with much of those recoveries attained earlier in the quarter. There's still a ways to go to regain the ground that was lost in the fourth quarter, but the rebound so far has been impressive, and it has occurred in both the growth and value components of each index, with growth slightly ahead in each case.
Last Friday after the bell, there was an interesting tidbit from Fitbit Inc. (FIT) , the former growth darling that has found itself in value land (for some value investors, that is). The company announced its newest fitness tracker, the Inspire, which the company is unveiling in a different way than other Fitbit products. The Inspire only will be available to health plan members; it's an interesting twist as Fitbit reportedly has 6.8 million people signed up via wellness programs that utilize its products. While pricing for the product was not revealed, Fitbit did state that it is the company's "most affordable" health tracker to date.
Fitbit is scheduled to release fourth-quarter earnings on Feb. 25, and it is one of the reports I am anticipating the most. Consensus estimates are calling for earnings per share of seven cents on revenue of $568 million. While I won't call it a "make or break" quarter, it is nonetheless an important one as the company tries to prove that it can be profitable and is making further headway into the medical monitoring markets.
Fitbit remains on solid ground from a balance sheet perspective; it ended last quarter with $623 million, or $2.54 per share, in cash and no debt. The stock is up 31% year to date and trading at a seven-month high, but has been range-bound as investors decide whether the company truly has legs. In order for the stock to take off, it needs to re-excite the growth crowd that left after the company disappointed them.