While the exact definition of small-cap stocks can vary from brokerage house to brokerage house, small-cap stocks usually have stock market capitalization of less than $1.0 billion, but more than $400 million. Small-cap stocks sometimes see their stock market capitalization eventually exceed $1.0 billion, at which point they become large-cap stocks.
The spot price of oil has been eerily steady for quite some time; this is quite unusual for the world’s most traded commodity.
It’s been a peculiar year in capital markets, and there’s definitely an uncertainty in sentiment, especially in the equity market with no real trend for investors to latch onto. It makes me think that equity investors should be proactive now and take a hard look at their portfolios for investment risk.
Speculative fervor has been reduced and while small-cap stocks, initial public offerings (IPOs), biotechnology stocks, and super-high-valued stocks have taken it on the chin, this is not unreasonable for the longer-run trend in equities.
The Dow Jones Transportation Average just hit another record-high and its long-term chart, while impressive, actually looks kind of scary. The capital gains are tremendous since the March 2009 low, which begs the question as to when it’s going to reverse.
Historically, most of the average’s declines have come in the form of short bursts of downside, peppered by several multiyear periods of non-performance.
The stock market is highly unlikely to break down without a commensurate move in transportation stocks. But there is clearly room for downside in these share prices. Delta Air Lines, Inc. (DAL) has doubled in value since just last September.
Caution. Caution. Caution. If you eliminate the bubble capital gains produced by stocks comprising the S&P 500 index during the late 1990s and their price recovery during the mid-2000s, the long-term chart still reveals an incredible performance. The crash of 1987 now looks like a blip. The 100-year chart of the S&P 500 is featured below:
Chart … Read More
Folks, there is a technical breakdown on the charts of the small-cap, growth, and technology groups in the stock market. I can’t say I’m surprised, given the major run-up in 2013 and the lack of any significant stock market correction.
The fact that the majority of the high-momentum technology stocks have corrected more than 20% is a red flag that there could be more breakdowns on the charts. (Read “My Simple, Safe Investment Strategy for Playing Risky Stocks.”)
While I’m not saying that a bear stock market is on the horizon, I do suggest that the stock market risk is above-average at this time, and we could see a bigger correction pending.
On May 6, there was a downside break of the Russell 2000 to below its key 200-day moving average (MA) of around 1,114. This could signal additional downside moves. As of that time, the index was down 4.78% in 2014 and 8.56% from its record high. The previous time the index corrected 10% from its high, it was subsequently met with buying support in the stock market. Note the downward-trending channel on the Russell 2000 chart below.
Chart courtesy of www.StockCharts.com
With the break, you could consider adding the iShares Russell 2000 (NYSEArca/IWM) exchange-traded fund (ETF) as a play on a possible bounce in small-cap stocks, especially if the index corrects more than 10%.
Technology also continues to be fragile, with the NASDAQ south of its 50-day MA. Watch for a possible move and testing of the 200-day MA at 3,982. This index has corrected 6.67% from its recent high and looks to be setting … Read More
There is clearly some selling capitulation towards the technology and small-cap stocks at this time. Following the run-up in 2013, we are now seeing the selling action picking up towards the higher-beta stocks. The S&P 500 and DOW may be looking fine, but the growth-oriented NASDAQ and Russell 2000 are showing added stock market risk. (Read “NASDAQ, Russell 2000 Signaling Buying Opportunity Ahead?”)
It’s time to unload some of your riskier holdings and look at some of the dividend-paying stocks that would likely provide more of a buffer against the current negativity in growth stocks.
Below, I have listed five dividend-paying stocks that are worth a look, especially if the overall stock market slides lower.
In the investment management sector, Och-Ziff Capital Management Group LLC (NYSE/OZM) pays out an impressive dividend yield. The company runs money from pension funds and other areas. In the fourth quarter, Och-Ziff beat the Thomson Financial consensus estimate by $0.32 after reporting a dividend of $1.15 per diluted share versus the consensus $0.83 per diluted share. According to the company, its assets under management have increased to $42.7 billion as of April 1, 2014.
Also in the investment area, Fortress Investment Group LLC (NYSE/FIG) has about $61.8 billion in assets under management as of the end of December. Fortress also pays out dividends of $0.32 annually for a yield of 4.4%.
For you pet owners, you are probably familiar with PetMed Express, Inc. (NASDAQ/PETS), the largest pet pharmacy in the United States selling prescription and non-prescription pet medications along with other health products. The company pays out a quarterly dividend of $0.17 … Read More
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