Small Cap Telecoms, Pharma, and Financials Buck Downward Trend

Small caps took a breather after financial stocks pulled back today following a rally last week.

At closing, the Russell 2000 (NYSE:IWM) was down 1.93%, while the Dow was down 1.82% and the S&P 500 fell 2.15%.

Concerns about more shares issued to the market by three banks that passed the government’s “stress tests” weighed on financial stocks today. Tech saw a rise today, though, after large-cap benchmark Microsoft Corp. divulged plans to raise money through a debt offering for the first time, and Dish Network posted better-than-expected quarterly profits.

Although today was a “down” day, there were still small caps that made solid gains. Communications services provider D&E Communications (Nasdaq:DECC) climbed a healthy 52% today after news broke that the small cap would be acquired by Windstream for $330 million. Anadys Pharmaceuticals (Nasdaq:ANDS) was also up 33% today after an analyst upgrade, while The South Financial Group (Nasdaq:TSFG) gained 32% following its operating results release late last week.

*****The “Stress Test rally” didn’t last long. Bank stocks had a good day Friday. In fact, they had a good week. Bank of America (NYSE:BAC), for instance, went from $8.70 to $14.17, a +62.8% gain. With that type of one-week gain, it’s not too surprising that banks backed off today as investors look to take profits.

There’s no doubt that the major indices are extended. Some kind of pullback is on order. But Jason Cimpl, technical analyst at TradeMaster, is in “buy the dips” mode.

Even though prices might be extended, we are still looking at an economy and a stock market that is in recovery. And that means current levels, like 8,400 on the Dow or 1,700 on the Nasdaq, have room for upside.

I’ll keep you posted on what Jason’s looking at and where he thinks . . .

For access to the full article, you must be a registered member - it's FREE.

Already a member? Please log in below