Date: May 9, 2023

Pause to Refresh But Hanging In as Media Discovers Russell Problem

Having survived the Fed, Apple and the jobs report, the markets scored a big win for the bulls on Friday. All of the concerns I had were almost all gone based on Friday’s action, but they do remain in place. Friday was one of those “rising tides lifts all ships” kind of day. The despair from the Fed was gone because Apple had good earnings and the February and March strong jobs reports were revised lower, something I started to discuss months ago.

The markets returned from the weekend without much excitement. Monday did a good job of digesting some of Friday’s big gains. The longer stocks can go without pulling back after some big gains, the more likely there is more upside ahead.

The media has finally started to recognize the Russell 2000 Index of small companies isn’t behaving well. While many of the other indices except for the S&P 400 are close to or above their February levels, the Russell 2000 looks just awful. This isn’t new. I have discussed it before. It could be because of the banking issues where small companies may not have as much access to credit as they last year. It may be because the market is sniffing recession and small companies typically feel that first. At this juncture we just don’t know.


Markets are pausing, but there isn’t much to glean yet. The NASDAQ 100 has broken out. The S&P 500 is close. The Dow Industrials have some more work. The winners keep winning and the laggards keep lagging.

On Friday we bought FUTY, VYM, RYU, QMAR, EPOL and XLC. We sold SSO, SARK, QJUN, some TUR and levered S&P 500.  On Monday we sold EMB.


Paul Schatz, President, Heritage Capital