Cashtaggers Warn: Be Wary of Small Cap Rally
Small-cap stocks caught a bid on Monday after Madame Fed Chairman Janet Yellen’s dovish speech renewed risk appetites and belief in the continued bull market. But investors on StockTwits.com saw reasons to be wary.
— BullTrade Corp (@BullTradeDotCom) Mar. 31 at 02:55 PM
Some cashtaggers on StockTwits.com said the action in small caps showed investors were still willing to bet on hyper-growth and that the five-year bull market was far from over.
— BumblebeeCharts (@bumblebeecharts) Mar. 31 at 01:18 PM
However, most investors said that the action was just a knee-jerk positive reaction to Yellen easing fears of a rate hike early next year. They warned that it was unwise to bet on hyper growth in small caps when the underlying economy still showed signs of struggle. They also said that valuations of companies with market capitalizations of less than $2 billion needed to come down, particularly those of speculative biotech firms with drugs awaiting approval.
— NextTrade1122 (@NextTrade1122) Mar. 31 at 02:56 PM
Some cashtaggers said that many companies had already taken down prior earnings guidance after seeing softer-than-expected demand.
— A B (@zanadu007) Mar. 31 at 03:24 PM
Sentiment on the $IWM was 79% Bearish, according to StockTwits’ analytics.
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