After some weak action in some of the hot speculative sectors on Friday, traders are back to work today and focusing on small-cap stock picking again. The Russell 2000 Small-Cap ETF (IWM) is leading again, and breadth is strong at around 2 to 1 positive. There are nearly 500 new 12-month highs, and the list of 10% movers is impressive long again.
The FATMAAN names are looking better today, but the hot action in this market continues to be in the small stocks. Around half the stocks on my list of leading names are priced under $10. You have to be much more selective if you are trading higher priced names.
Janet Yellen is testifying and is giving the market the sort of dovishness that it loves. However, the action isn't quite as frothy today. The casing isn't as aggressive, and there is some selling into strength.
There is some very strong action in the lithium sector, with Lithium Americas Corp (LAC) running away. LAC was my "Stock of the Week" back on August 31 when it was trading under $8. It is hitting $28 this morning.
One of my top five low-priced stocks for 2021 is Gamida Cell (GMDA) . The chart is developing well, and there is a catalyst coming up in early February, so I named it my Stock of the Week. The key to trading small-cap names like this is to keep looking for strong technical setups. These stocks will languish at times, but if they have a good story or fundamentals, the technical setups will tell the story.
I chased some Inseego (INSG) higher this morning. This is a 5G play and has been gaining traction. Also of interest is Retractable Technologies (RVP) , which produces retractable syringes. With Biden likely to provide substantial funds for Covid-related medical supplies, RVP should benefit.
I see some consolidation in favorite names, which isn't a bad thing, but this continues to look like a very healthy market. The old-time market pundits hate this action, but it is great for all the aggressive small traders that can move quickly.