Tuesday's headline... Dow closes at a 14-Month High! Unfortunately, the Dow 30 Industrials is not the only indicator for the health of U.S. stock assets.
For instance, when the Dow hit a new 52-week high back on October 14, more than 460 stocks on the U.S . exchange hit new highs. After a brief correction, the Dow hit another peak on November 16. However, less than 320 stocks notched a new top. And by November 23, with the DJIA at brand new 52-week highs once more, only 190 reached the 52-week high point.
What this tells market watchers is that the breadth of the cyclical bull may be waning; less and less stocks are hitting new highs. And, while some capitalization-weighted indexes may be rising, their individual components may be petering out.
(For more on a potential shift in momentum, refer to Defensive ETFs: The Real Reason They're Above Their Trendlines.)
And there's more. The iShares Russell 2000 (IWM) is 5% below its October 14 price, suggesting that the bull market is confined to fewer and fewer large-cap companies alone. In fact, IWM is having a difficult time getting back above a 50-day trendline.
With flashing yellow lights appearing on the U.S. stock scene, particularly in the smaller company arena, one might be concerned with emerging market small caps. Yet Small Cap Brazil (BRF) and Small Cap China (HAO) are still hitting new high marks.
What is it about these 2 BRIC countries that remains so comforting to stock investors? Is it a steadfast belief in the potential of the domestic (local) economies in Brazil and China... where the middle class is rising? Or is it merely the preferred choice of weak dollar carry trade investing?
Maybe it's both!
If you'd like to learn more about ETF investing... then tune into In the Money With Gary Gordon. You can listen to the show LIVE, via podcast or on your iPod.
Disclosure Statement: ETF Expert is a web log (blog) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The company does not receive compensation from any of the fund providers covered in this feature. Moreover, the commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.