The Outperformance of the Russell 2000 Deserves Immediate Attention



Tuesday, the Russell 2000 (+1.4%) closed at a record high on encouraging vaccine news and the coming Trump Administration’s aid/relief/stimulus package.“– Paul Ebeling

Inflation will likely rise above 2% in Y 2021 and range from 2.25% to 2.4%.

The consensus is that inflation may temporarily rise above 2% in Q-2 of Y 2021 before retreating again in the following quarters, according to a a survey of 51 US economists.

Our view is counter to the consensus.

While the US economy has not stayed above the target set by the Fed there is an expectation among market participants that widespread vaccine development and distribution will unleash spending and generate growth at a very fast pace.

We also believe the following:

  • The underperformance of small caps has ended. The move has been very powerful since September and will continue into and throughout Y 2021.
  • The copper-gold ratio suggests that the benchmark 10-yr Treasury yields should be higher.
  • Re the FAANGs and Microsoft: These stocks are breaking down as the market’s leaders and domestic financials, materials and energy taking the lead.
  • We like buying gold at these current prices and are Neutral with a Bullish bias now.

Tuesday the benchmark US stock market indexes finishes at: DJIA+104.09 at 30173.82, NAS Comp +62.83 at 12582.69, S&P 500 +10.29 at 3702.26.

Volume: Trade on the NYSE came in at 911-M/shares exchanged

HeffX-LTN’s outlook for the major US stock market index is Very Bullish in here.

  • NAS Comp +40.2% YTD
  • Russell 2000 +14.9% YTD
  • S&P 500 +14.6% YTD
  • DJIA +5.7% YTD

Looking Ahead: Investors will receive the weekly MBA Mortgage Applications Index, JOLTS, Job Openings report for October, and Wholesale Inventories for October Wednesday.

Have a healthy day, Keep the Faith!

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