The Market Feels Warmer

The market feels much the same this week as last, like the recovery from the August decline is becoming more established. Investors have five toes in the water now, and it feels pretty warm.

We’ve finally seen the biotech sector, as measured by the iShares Biotech ETF (IBB), jump above its 50-day moving average (DMA). The much more thinly traded PowerShares S&P SmallCap Health Care ETF (PSCH) is right on the cusp of a breakout as well.

Semiconductor stocks, as measured by the iShares Semiconductor ETF (SOXX), are taking a little breather from their one-month rally. Both of these are extremely fickle industries, as exemplified by the bipolar moves in two popular semiconductor stocks that reported yesterday: NXP Semiconductors (NXPI), which has a market cap of $17 billion, fell by 20%, and InvenSense (INVN), which has a market cap of $1 billion, rallied by 11%. Both stocks moved on earnings.

Large caps outperformed over the past week, rising 1.8% compared to a 1.2% rise in small caps. Growth ruled value in both. Small-cap performance by sector is broken down below.

Tyler Laundon is Chief Analyst of Cabot Small-Cap Confidential. To read subscriber reviews of Cabot Small-Cap Confidential, click here.

This is an excerpt from Cabot Small-Cap Confidential, which features little-known stocks with big potential. It offers a limited number of subscribers the opportunity to discover overlooked, low-priced stocks that have the potential to skyrocket. This advisory is best suited to experienced investors who embrace volatility.

Stock Picks


This stock could rise 50% before becoming fairly valued.

This hot technology company is growing like a weed, thanks to products that speed up cloud communications.

This stock is somewhat well known, but far from well loved.

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