As compared to the last month, this was a relatively subdued week. Stocks fell modestly, with large caps giving back a mere 0.1% and small caps giving back 0.7%. Biotech continues to be a weak area of the market (it fell by 3.5%), and Obama's proposed test program to lower reimbursements for drugs administered by Medicare doctors isn't helping.
My attention is now largely split between research to determine which sectors of the market are most likely to embark on sustainable uptrends, and which undiscovered small cap stocks will become the "new" asset class leaders. Is the gold stock rally for real? Can oil hold above $35.00 a barrel? When will the biotech sector fight back? Is there a direct and simple way to play what seems like an early spring and long summer in 2016 (and maybe in future years)? What are other small cap specialists missing, and where can we beat them to the punch? These are just a few of the things on my mind.
Below is a chart of small and large cap sector performance YTD. The more defensive areas of the market continue to outperform, but there's also been a big improvement in the most beaten-up sectors.
This chart of small cap sector performance over the past week shows why I say market action has been relatively subdued. Last week I had to expand the scale up to a 25% gain to get energy to fit!