Small Caps Soar On January 12 As Mega Caps Struggle

Small Caps Soar on January 12 as Mega Caps Struggle

It was a flat day for the S&P 500 and the NASDAQ 100, but the Russell had the big day up nearly 1.8%.  The Russell had some big movers today, with Penn National (PENN) and Plug Power (PLUG) moving up sharply.  PLUG is on the most shortest list so, perhaps a good portion of these moves are driven by short-covering, trigger by positive news, like PLUG today.

Russell (IWM)

Since the beginning of November, the Russell is up almost 38%, and clearly, that is in the hope more stimulus will benefit these smaller companies the most.  It is worth noting that the NFIB Optimism Index fell to 95.9, its lowest level since October 2016, if you omit the pandemic period.

The Russell is extremely overbought on an RSI and Bollinger band basis. There is a gap to fill down around $196 on the IWM.

Zoom (ZM)

Zoom jumped by 5% today, which seemed kind of surprising given they announced a secondary this morning. I will be curious to see how the deal prices and demand looks. Based on the stock’s performance over the last several weeks, you would never know that the stock was in high demand. If the deal goes well, it could put a floor in the stock. The gap was nearly filled this morning at $325 when the stock got to as low as $331. (Paid Subscriber Content on SA market place – RTM Option Analysis – Zoom Faces Further Losses)

Urban Outfitter (URBN)

In an article today, I noted some bullish options betting in Urban Outfitters yesterday. The stock has had a powerful performance in the last couple of days. After the close today, the company reported disappointing comparable sales for November and December and a change at the CEO level in one of their brands. The stock is falling in the after-hours, to my disappointment.

It could fall all the way back to $24.85, and the bullish pattern in the stock would still be intact, so the next day or so will be telling. 

Lemonade (LMND)

Lemonade also announced a secondary filing to sell for holders and the company. The stock was down around 5% today and managed to hold support around $167.50 when it was tested. Again, the pricing will be important for us to get a sense of the next move. 

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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