Tags: Kahn | technical | stocks | summer

Barron's Kahn: Technical Indicators 'Suggest Bumpy Summer' for Stocks

By    |   Monday, 01 June 2015 07:00 AM

Although major stock indexes have hit record highs in recent days, with the Nasdaq Composite index doing so Wednesday, the technicals aren't so hot, says Barron's columnist Michael Kahn.

"We have to wonder why the broad market is still within 2 percent of where it was in February," he writes.

"True, the short-term trend is still grudgingly to the upside since March, but money flows into major market exchange-traded funds such as the SPDR S&P 500 ETF Trust and the PowerShares QQQ Trust have been flat, at best."

The technology and banking sectors have strengthened in recent weeks. But, "they cannot do it alone" for the stock market, Kahn says.

"Generals need soldiers to follow them into battle, and many areas of the market refuse to do so.
This suggests the summer will be bumpy."

And what is the technical problem? "The market has started to narrow, while breadth has started to contract," Kahn explains.

With the S&P 500 index having tripled in the last six years and now standing less than 1 percent below its record high, many experts are worried about a crash. So which stocks offer safety in the event of a market meltdown?

USA Today, using data from S&P Capital IQ chose nine stocks. They are small-cap issues (market capitalization of $400 million or less) that are members of the S&P 1500 index. They trade for 50 percent valuation discounts to the average of stocks in the index.

Three of the stocks are technology company Digi International (DGII), Monarch Casino & Resort (MCRI) and apparel seller Christopher & Banks (CBK)

"Why does all this matter?" writes USA Today's Matt Krantz. "Academic studies have shown top-performing stocks over the long haul tend to be ones that carry valuations that are below the market's."

Small-cap stocks "also have been demonstrated to be top performers," he says. "Combine these two traits and magic happens."

The Russell 2000 index of small-cap stocks has returned 11.7 percent over the past year.

Rounding out the rest of the list are Bel Fuse (BELF.B), Pericom Semiconductor (PSEM), Cohu (COHU), DSP Group (DSPG), Kopin (KOPN) and CryoLife (CRY).

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Although major stock indexes have hit record highs in recent days, with the Nasdaq Composite index doing so Wednesday, the technicals aren't so hot, says Barron's columnist Michael Kahn.
Kahn, technical, stocks, summer
356
2015-00-01
Monday, 01 June 2015 07:00 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved