The Small Cap Breakout

The terrifying bull market broadened its base yesterday, driven by expectations of easy money.

Small caps tend to be more dependent on borrowing to finance operations than the cash-rich mega-cap players.

So it’s no surprise that as the Fed acquiesced to cutting interest rates Wednesday, small caps, as measured by the Russell 2000 Index (IWM) broke out of a four-year range:

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Small cap stocks broke through an existing trading range to new all time highs yesterday. (Source: TrendSpider)

Adam O’Dell suggested during yesterday’s Grey Swan Live! that the iShares Russell 2000 ETF, IWM, might be the index to watch – it could outperform the S&P 500 for the rest of the calendar year.

~ Addison

P.S. Our paid-up Grey Swan Investment Fraternity members got a masterclass in Adam’s data-driven approach to small-cap investing. That includes how he identified gold mining stocks before they outperformed the Mag 7 AI stocks over the past year.

If you are already a member, look for your monthly Bulletin later today.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three.

The terrifying bull market broadened its base yesterday, driven by expectations of easy money.

Small caps tend to be more dependent on borrowing to finance operations than the cash-rich mega-cap players.

So it’s no surprise that as the Fed acquiesced to cutting interest rates Wednesday, small caps, as measured by the Russell 2000 Index (IWM) broke out of a four-year range:

Turn Your Images On

Small cap stocks broke through an existing trading range to new all time highs yesterday. (Source: TrendSpider)

~ Addison

If you are already a member, look for your monthly Bulletin later today.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

Debts and deficits will eventually cause a crisis. Treasury Secretary Scott Bessent’s effort to help bail out the Japanese Yen this week is entirely motivated by self-preservation. The contagion signal flashing in Japanese bonds since late ‘25 is infecting the BOJ, which may be forced to sell U.S. Treasurys to stabilize its own currency.

The copper price is no doubt benefiting from inflation driven by money printing. But the doc don’t lie. Copper’s new all-time highs, while gold and silver still languish, are a sign the AI growth story is also that of the global economy itself.

Many miners were profitable with gold around $2,000 and silver near $50. At sustained prices closer to $4,000 gold and $60 silver, the arithmetic changes dramatically.

The stock market is getting an unexpected boost to kick off August, bucking the historically weak summer session for the U.S. stock market.

What’s happening? The Bank of Japan and the U.S. Treasury are making a coordinated effort to support Japanese yen; a move last attempted nearly 30 years in the height of the Asian Financial contagion (1998).

Many miners were profitable with gold around $2,000 and silver near $50. At sustained prices closer to $4,000 gold and $60 silver, the arithmetic changes dramatically.

The stock market is getting an unexpected boost to kick off August, bucking the historically weak summer session for the U.S. stock market.