• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

What Will Stop the Bleeding in Small-Cap Stocks?

The decline has been death by a thousand papercuts.
By TIMOTHY COLLINS
Jul 16, 2021 | 04:11 PM EDT
Stocks quotes in this article: IWM

We're polishing off our third straight week lower in the iShares Russell 2000 ETF (IWM) . The nearly 5% drop is the worst in quite some time along with the ugly red candle we saw in June. Over the past year, this is the closest we've seen two weekly red candles of that size.

We did have some big intra-week drops back in February and March, but those both recovered more than half the losses by the end of the week. This time we're going out on lows. When that happened in June, we did see a bounce the following week that reversed the entire loss; however, that came while the market was in an uptrend, and we were testing the 21-week simple moving average (SMA).

None of those technical strengths sit with us now.

This week felt terrible. The last three weeks have lopped off over 7% from June highs. If bulls don't step up, we might not fight support until we test $200. I'm not sure too many new traders can handle that emotionally right now. Scratch that "new" part. I'm not sure many traders can handle that at the moment.

Sentiment, at least with the folks I talk with week to week, has hit a new low. It's a battle between hopelessness and giving up.

With large-caps finally starting to falter as well, I'm not sure what will stop the bleeding. Even though we talk about a 7% pullback in the IWM, I've seen many more individual names fall 15%, 20%, or much more in July.

The problem is I don't think we've gotten anything close to a capitulation. The decline has been death by a thousand papercuts as stocks have been walked lower day by day in an orderly fashion rather than a rip off the band-aid sharp down day where indexes see a 5% to 7% drop, then bounce from the lows to cut losses.

At this point, make sure you can sleep, but I'd want to be able to buckle in on names I own and ride through the storm. I mentioned Thursday that if you have your buy list and cash to put to work that scaling in would likely be best as you might find yourself adding 10% lower in quick fashion then another 15% lower in just as quick fashion. It's fair to see we've seen plenty of 5% to 10% drops today. Granted, more the weakness I'm seeing is closer to that 5% level, but right now we're not demonstrating signs of stopping or reversing the current trends.

Maybe next week will be different but "maybe" isn't a convincing word. However, it's the best I have to offer.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Collins had no positions in any securities mentioned.

TAGS: ETFs | Investing | Markets | Small Cap | Stocks | Technical Analysis | Trading

More from Stocks

3 Dividend Growth Stocks for Long-Term Income

Bob Ciura
Aug 19, 2022 2:00 PM EDT

These stocks have the ability to raise their dividends at a high level each year, while they also have solid yields right now.

Fossil Fuel Production Still Has a Long Way to Go

Maleeha Bengali
Aug 19, 2022 1:30 PM EDT

A complete transition to clean energy is years if not decades away.

When Seeking Real Returns, Don't Forget Supply, Demand and Scarcity

Jim Collins
Aug 19, 2022 1:00 PM EDT

Here's why I still see energy and other essentials -- including coal and land -- as hot opportunities.

I'm Tasting 3 More Wine Stocks, Though None Pair Well With My Portfolio

Jonathan Heller
Aug 19, 2022 11:30 AM EDT

These three publicly traded wine companies have been seeing their shares languish, one for a long time.

3 Reasons Stocks Soon Could Head Back Downhill

Bret Jensen
Aug 19, 2022 11:00 AM EDT

This trio of factors involves the Fed, the economies of Europe and the American consumer.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:23 PM EDT STEPHEN GUILFOYLE

    We're Cleaning Out This Retailer From the Bullpen

    Check out the latest moves in TheStreet's Stocks U...
  • 10:24 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    To Improve Your Trading and Investing, Spend More ...
  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login