As it is written in the 2021
Stock Trader’s Almanac on October 21 on page 97, late October is the time to
buy depressed stocks, especially techs and small caps. In the chart here taken from
page 112 of the 2021 Almanac we divide daily data for the Russell 2000 index of
smaller stocks by the Russell 1000 index of the largest stocks since July 1,
1979, and then compress into a one-year seasonal pattern from July to June.
When the graph is descending large caps are outperforming small caps; when the
graph is rising, small caps are moving up faster than large caps. This year has
been rather typical.
You will remember the November 2020 was a month for the
record books for the Russell 2000. And then R2K topped out in March 2021 and
has been lagging the big cap indexes since spring. Over the past couple of days
the R2K appears to be perking up right on schedule. We just released a new small/mi-cap
stock basket to subscribers in order to take advantage of the “Best Months”
of the year (November through April/June) for stocks on the heels of our Seasonal MACD Buy