MARKETS Jefferies, BofA suggest that small caps could be poised for snapback rally

MARKETS Jefferies, BofA suggest that small caps could be poised for snapback rally ...

Dec 22 - Welcome to your home as a real-time coverage of markets. Now, by reporters from Reuters, you can share your thoughts with us.

THEFFERY, FUGGEST SUGGEST SMALL CAPS MUST BE POISED FOR SANCAPACK RALLY (1/12 EST 1612 GMT)

The omicron wave could soon be the target of a broader rally, says Jefferies and Bank of America Global Research, in separate reports Wednesday.

Small-caps have the hardest time managing the investment risk of the possibility of a surge in cases count, but what are they so big? But signs such as higher rate of cases count will likely knock out the company's shares in the new year, BofA strategists wrote.

We find that small vs large-cap performance has a higher correlation between new hospitalizations (which have recently ticked down) and new cases over the past year, wrote the report.

Compared to large cap equities, attractive valuations in the Russell 2000 benchmark should be a boost in the coming quarter, noted Jefferies. The price to earnings ratio of the Russell 2000 fell to 25 from 32 last January, the report noted.

Small businesses should surpass smaller corporations by over 6% over the next 12 months, Jefferies said.

Despite the increase in small in January in average, it has been 3.7%, but when Q4 is down, they bounce back by 4.7%. Moreover, the most recent of the small grows 8,4% next January in all periods compared to 7% in all periods, report said.

While Jefferies buys products, he's also recommended Dave and Buster's Entertainment Inc., Urban Outfitters Inc., and National Vision Holdings Inc.

(David Randall)

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Is it REALLY GOOD? (1035 EST/1535 GMT)

The exchange rate index has declined sharply at 2% from the previous estimate of the day market, a racial issue. The risk of the Build Back Better plan passing in Washington is in awe of a hawkish Fed, the Omicron variant spread and the uncertainty surrounding how it would be likely to buy a more robust plan.

In the last month of the year, the tone has become more defensive with sectors such as consumer goods and utilities being the best perform since December, while consumer discretionaries and technology had hindrances, raising the question about whether this is the portend of stormy seas for the broader market.

In a recent note, Bespoke Investment Group analysed the outperformance, using ETFs, between a and discretionary and found that when staples outperformed discretionary by 10 or more percentage points on a monthly basis, the S&P 500 struggled in the mid-terms going back to 1990.

Despite the recent economic year, the primary stock had more than a dollar in value.

Jason Goepfert at Sentiment Trader also looked at the recent strength of staples and found that the percentage of staples trading above their 50-day moving averages reached 90% last week, while fewer than 25% of stocks on the Nasdaq managed to hold that level, the widest spread in at least 30 years.

But unlike Bespoke's findings, Goepfert found that comparing the two was not a good predictor for a market decline, with only one instance leading to a very strong downturn since 1990.

(Chuck Mikolajczak)

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U.S. STOCKS REEP AROUND AFTER TRADE (1003 EST/1503 GMT)

The main index of Wall Street has a flat rate early on Wednesday morning, with concerns over the Omicron-like variant of the coronavirus and what it may mean for the global economic recovery.

The S&P 500 has a second straight closing at nearly $461 for its 50 day moving average (DMA).

The Nasdaq 50-DMA is nearly 20.500 feet long.

There are market opportunities early in the trade:

(Terence Gabriel)

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S&P 500: SULVER HATTER (0900 EST/1400 GMT)

Aside from Tuesday's strong bounce, the S&P 500 index is now only up around 1.3% from its 4 722,02 November 10 record.

In fact, the average five days that the CBOE has to be a treble of equity (P/C) ratio, which can be seen as a contrarian measure of sentiment, is now suddenly cooperating with bulls : - the racy - the reversal of the CBOE equity ratio, which is a positive measure of efficiency.

The measure increased to 58% on December 6 and 4 December, but is now deflating to 51.8%. The P/C measure has now ranged between high-30% and low-60% readings.

If the pattern continues, then the measure appears to signal that market sentiment continued to bearish in the past several weeks, that the SPX can recover more slowly.

It's always recommended that traders monitor and see whether the P/C measures should backfire at 40%.

A CP-M measure that runs much above the low-60% area, however, can act as a signal for panic. The measure surpassed 105% on March 17, 2020, a collapse from a more-than-30% S&P 500.

(Serence Gabriel)

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