Russell Goes Green

Mid-cap and small-cap stocks rebound thanks to rotation...

Good afternoon… a quick update…

A sudden surprise was that the Russell reading went positive, scoring 72 to 52 on breakout and breakdown stock conditions. This led us to dig deeper and find that there has been a nice rotation into small-cap stocks.

This is a surprising development, but not entirely shocking. In 10 stocks, I noted that the big question centered not around the “Tech Bubble” popping but the question of whether money would leave the U.S. equity markets.

Microsoft (MSFT) is down 6.4% today, but it’s not really impacting the S&P 500 much. Selling pressure is light across the board. Ten stocks are down 5% on the day and down 5% on the week, while 10 stocks are up 5% on the day and up 5% on the week. Money doesn’t appear to be cascading out. Selling pressure in the tech sector remains high, but flows into materials, cyclical, and healthcare remain strong.

Utilities and real estate are especially strong today.

We’re still being cautious with the PCE Index tomorrow. But a surprise…