Small Stocks are "Melting Up" in May

Excerpt from Louis Navellier's Marketmail - 5/22/2018

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As the first-quarter earnings announcements wind down, the announcement of new dividend increases, stock buy-backs and new acquisitions have put a strong foundation under many stocks. In addition, the amount of stock outstanding continues to shrink, so there are fewer shares to buy. The main switch in allocations over the last month has been caused by a resurging U.S. dollar, which is causing many institutional investors to cut their allocations in multinational stocks as they focus on domestic stocks. As a result, the small-cap Russell 2000 has risen by 5% so far in May vs. just 2.4% for the S&P 500.

The 10-year Treasury bond has risen decisively above the 3% level to the highest yield in seven years. However, thanks to strong buy-back activity and positive analyst community reports, there is persistent institutional buying pressure, so every dip should be viewed as a buying opportunity. Since computers and algorithms tend to sell without thinking, this opens up plenty of buying opportunities most weeks.

In This Issue of Marketmail

Bryan Perry examines the likely market impact of a new trifecta of economic concerns: a rising dollar, spiking oil prices, and rising interest rates. Gary Alexander examines the latest data to expose another false alarm in the recent concern over "peak earnings. Ivan Martchev examines the recent decline in gold and silver prices in light of a rising U.S. dollar and gold buying in China and Russia. Jason Bodner focuses on the once-weak, now-strong Energy sector. In the end, I'll also look at the energy fundamentals, along with hopeful signs for 2nd and 3rd quarter GDP growth based on the Leading Indicators and other data.