Small Caps Have Seasonality In Their Favor?
It's not even Halloween but on Wall Street small cap investors are jolly - 'tis the season, they say.
That is, the season for investing in the Russell - and the Nasdaq, too!
According to Jeff Hirsch of Stock Traders Almanac small caps and tech have seasonality in their favor and Tuesday’s sell-off presents buying opportunities.
”We had a very typical seasonal downturn from May to October,” he says. “And then we had a nice turnaround on Tuesday October 4th. It looks to me the seasonal patterns (are in tact) and the market is marking to those historical rhythms."
And those rhythems are music to the ears of every bull on Wall Street. Typically the fourth quarter is a strong quarter.
"I think we’re set up for a nice run into what are typically the best 3 months November through January."
Of course that begs the question – what’s the trade?
”I’m a buyer of the IWN , the ETF that tracks the Russell 2000 and the QQQ, the ETF that tracks the Nasdaq . That’s the easy way to go,” says Hirsch.
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Trader disclosure: On October 25, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Nathan is long Oct. put spread AMZN; Nathan is long Jan. put spread BAC; Nathan is long Nov. put spread MS; Nathan is long Oct. put butterfly NFLX; Nathan is long Oct. put spread GS; Nathan is long Mar. call spread RIMM; Adami Owns AGU; Adami Owns C; Adami Owns GS; Adami Owns INTC; Adami Owns MSFT; Adami Owns NUE; Adami Owns BTU; Finerman owns AAPL; Finerman owns GOOG; Finerman owns JPM stock leaps; Finerman owns MSFT; Finerman’s firm owns AAPL; Finerman’s firm owns JPM stock leaps; Finerman’s firm owns MSFT; Finerman’s firm owns short calls IBM; Terranova owns IBM; Terranova owns AAPL; Terranova owns AXP; Terranova owns CAT; Terranova owns F; Terranova owns GS; Terranova owns OXY; Terranova owns FCX; Terranova owns LQD; Terranova owns MUB
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