Small Cap Network Blog

Technically we’re still in the ‘too soon to call’ stage, but if I had to venture a guess right now I’d say the next few days may be trouble for stocks. Oil looks like it hit a short-term bottom, and the dollar looks like it hit a short-term top…two things stocks can’t really afford to deal with right now. So, add that to the bearish forecast I published this morning about the Russell 2000.

Friday’s low near $110 for crude pretty much tagged that key Fib retracement line - a 61.8% retracement - but we’d seen the downtrend get slower as that level was approached.

The dollar had worked its way into an overbought situation as well. The U.S. Dollar Index peaked at 77.25 on Friday, and so far today we’ve only seen a lower range. However, now that we’ve seen the dollar index pause here, the reason has presented itself. Take a look at where the U.S. Dollar Index topped out a couple of times in February. It was right around 75…where we are now. The dollar’s bulls can’t risk a repeat of that short-term high, so they’re probably apt to start trickling out.

All of these things should weigh in on stocks. Hence, I have even more conviction with my bearish argument from this morning.

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If the rest of the market were up for the day I’m sure I wouldn’t even mention it. But, when one of our bulletin board stocks is making a gain in this environment, I think it deserves at least a mention….particularly when it looks like it’s trying to stage a breakout.

I’m talking about our small cap pick Voyant International (VOYT). It’s up 11% for the day, which isn’t huge, but we’re also seeing this stock finally get past a fairly significant ceiling at 14 cents. Better still, it looks like the buying volume is growing again.

Nothing earth-shattering, but this move is going to put VOYT back onto my short list of stocks worth watching. It also makes me wonder if there’s some yet-to-be-released news some traders are trying to get a jump on.

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I alluded to the idea on Friday, but after seeing the market on poorly today, I’m leaning even further on the bearish side of the fence.

The Russell 2000 ETF (IWM) probably best illustrates my thoughts here. After peaking at $76 in June, it did so again on Friday….before fading. Today we’re watching the sellers take control again. Being overbought - stochastically - didn’t help any either. Oil’s a little higher, the dollar’s a little bit lower. Both of those ‘little bits’ are ripe to turn into something more than ‘just a little bit’.

From here I’m looking for the whole market to sink, led by the Russell 200 and the NASDAQ. That’s not a forecast of another full-blown bearish leg - just a pullback, for now.

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