...MicroCaps are the anomaly of sector Bear or Bull markets. For example, the resource sector, especially metals exploration companies, have been bearish for over three years while biotech and technology companies have been bullish.
I look to funding events - IPO's, M&A activity; expert opinions and general buzz at financial conferences to determine what my expectations are regarding the next long-term trend. Obviously if the Big Board gets crushed, all bets are off for microcaps. Unfortunately, they also comeback last after the larger companies recover.
Indications are that the sentiment in the street is mixed - not overly bearish or bullish, but I am hearing some negative complaints arising from professionals in the mix. Then we are heading into the fourth quarter, which includes the big holiday season push, where retail gets bullish just by the gross revenue generated during the shopping season. From the calendar end of the third quarter, nothing matters more than generating a good fourth quarter, which can be responsible for saving the whole year.
It seems like microcap stock prices are trending lower and IPO's are slowing down, but crowdfunding is growing exponentially and fad stocks, like cannabis stocks, are streaking with big spikes and drops adding to volatility.
MicroCaps have rotation and can get toppy as share prices get ahead of revenue expectations, but in general, microcaps are getting more and more new investorsm which actually absorbs selling pressure. The fourth quarter could genuinely take the large cap market higher and late year profit taking will certainly assure microcaps of having a trickle down bullish market right through New Year's Eve.
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