Global Indexes Slip but Should Rebound, Small Caps Lead the Way

Stock prices around the globe continued to pull back over the past four trading days in response to investors’ fears regarding the effect that recently imposed tariffs and threats of additional tariffs might have on economies in major regions of the world.

Specifically, the Dow Jones Industrial Average fell by 365 points (1.5%), while the S&P 500 Index declined by 1.4%, the technology-laden Nasdaq Composite Index dropped by 2.5%.

The small-cap Russell 2000 Index fell by 2.4% from Friday, June 22 to Thursday, June 28.

Meanwhile, the European Monetary Union Index declined by 2.4%, Japan’s NIKKEI 225 Index fell by 1.1%, India’s BSE Sensex Index declined by 1.8% and China’s Shanghai Composite Index dropped by 3.6% over that same four-day trading period.

Looking forward, my research indicates that stock prices in general will rebound during the week ahead.

Readings on key economic indicators for the United States, the Eurozone, Japan and India suggesting that those economies will continue to expand at a healthy pace for the next few months.

My proprietary Overbought-Oversold Indicator also suggests that stocks will move higher during the coming week, with the reading on that short-term stock market indicator falling to substantial oversold territory on June 27-28.

Although our Small-Cap Profit Confidential portfolio moved essentially in-line with the overall U.S. stock market this week, our portfolio has continued to outperform the S&P 500 Total Return Index.

The value of our portfolio appreciated by 4.0% since the inception of our small-cap newsletter on April 13 of this year.

In comparison, the S&P 500 Total Return Index rose by 2.0% over that same period.

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