- Â The strongest small cap sectors are utilities and basics.
- Â The best small cap industry is gold.
Stay on the sidelines until day three post-Brexit vote and then use rebounding markets to de-risk.
The average small cap score is 45.41 and the four week average score is 50.68. IMPORTANT: We have rolled scores to reflect third quarter seasonality. The impact of our regular scheduled quarterly shift in the seasonality component of our model is magnified by post-Brexit market action.
The following chart will be familiar to long-time clients because we typically break it out around inflection points. The chart shows how many stocks in our universe are trading greater than 5% below their 200 dma. Historically, this measure is actionable at extremes.
The top scoring small cap sectors are utilities and basic materials. Financials — in sharp contrast to large cap — and technology also score above average. Consumer, industrials, and healthcare score in line with the average universe score. Services score below average.
The following stocks are the top and bottom scoring in small cap following our shift to Q3 seasonality.
The next chart shows historical small cap average score over time for context.
Gold (NG, SA, DRD) is the top scoring small cap industry. Business software (EBIX, MSTR), credit services (WRLD, EZPW), diversified electronics (SIMO), and computer peripherals (ALOT) are also high scoring.
Gold, steel & iron (AKS), and industrial metals & minerals are best in basics. Only processed & packaged goods are high scoring in consumer goods. Credit services, regional banks (SNBC, CFNL), and S&Ls (BRKL, DCOM) are top scoring in financials. Specialized health services (AHS, USPH, BEAT), home healthcare (AMED), and medical instruments (IART, ANGO, VASC, UTMD) are top scoring in healthcare. The strongest industrials basket is aerospace/defense (TASR). Catalogs (FLWS) can be owned in services. Business software, diversified electronics, and computer peripherals score highest in technology.
