Here's 2 Small-Cap ETFs to Play for Double Digit Returns

You are receiving this email because you signed up to receive True Market Insider. Unsubscribe Keep the emails you value from falling into your spam folder. Whitelist True Market Insider. Forgot your login information? Click here. Here's 2 Small-Cap ETFs to Play for Double Digit Returns Hi... Thanks for stopping by. Today we're going to look at two popular ETFs that track the small-cap investing space. Each has its merits, but both are excellent for gaining bullish exposure to firms in the $300 million to $5 billion market cap range. Before we jump into all that though, let's jump back and look at how the market fared over the past week. While the large- and mega cap tickers were declining, one of our small-cap proxies was advancing. The S&P 600 (SML) rose a bit more than half a percent. And while our other proxy, the Russell 2000 (RUT) fell by -0.39%, it still outperformed the Dow Jones (-0.75%) and the Nasdaq Composite (-1.33%). (Click any image to enlarge) That decline in the tech-heavy Nasdaq is notable for what it might be telling us about the state of the market. Here's what I mean...   ========Recommended Link======== UNLOCK MASSIVE PROFIT POTENTIAL 25-year sector trading veteran reveals the simple 3-step process that maximizes your profit potential. More Info... The market's stunning advance since bottoming on March 23rd has been driven by giant tech firms, the Googles, Facebooks and Amazons of the world. Any weakness in tech could spell weakness in the overall market. Earlier this week ("How to Guard Against a Wreck in "Big Tech") my friend and colleague Costas Bocelli has this to say about the tech sector: "Technology is obviously the most overbought segment of the market and the most heavily crowded in the marketplace. Investors piling into high-tech growth have benefited from the bullish momentum. But one has to wonder: How much more is left in the tank before we reach buyers' exhaustion? That's anyone's guess. But let me tell you that the conditions for a "downside correction" are firmly in place." I've learned to take Costas' insights very seriously over the years, and I'm not surprised to see his most recent call starting to play out in the real stock market. Speaking of which... Our #1 risk barometer, the New York Stock Exchange Bullish Percent Index (NYSE BPI) made a significant move this past Friday. After spending 43 days in a column of O's (indicating the market is weak in the short-term) the chart flipped into X's (indicating strength in the short term). The NYSE BPI is so central to the "true market" way of investing that we've created an entire website dedicated to tracking its every important move. You'll find more detail about the BPI there, so you should bookmark that page and refer to it frequently. Ok... Earlier we looked at how our two small-cap proxies performed over the past week. We saw that small-caps came in #1 and #3 in a ranking of the five major indices. Now let's look at how to play small-cap strength. iShares Core S&P Small-Cap ETF (IJR) tracks the investment results of the S&P 600. Typically, this ETF invests at least 90% of its assets in securities that make up the S&P 600. (The index itself is cap-weighted; to be included, a company has to have a market cap between $600 million to $2.4 billion.) All ETFs charge you to be a shareholder. This is called the "expense ratio" and the fees go toward paying the fund's annual operating expenses. IJR has an expense ratio of 0.06% -- 6 basis points, which is extremely low. The fund trades about three million shares daily, so it's not as liquid as many other funds. Five sectors -- Consumer Cyclicals, Healthcare, Financial Services, Technology and Industrials -- make up 73% of the fund. Firms in the IJR include: Lithia Motors (LAD), Momenta Pharmaceuticals (MNTA) and Emergent BioSolutions (EBS). In the way of COVID-19 the fund lost 44% of its value as it fell from $85.37 on January 17th to $47.52 on March 23rd (the market bottom). Since then it has gained 47% and is finding support at its 200-Day Moving Average (the red line) and bumping up against a key Fibonacci level -- $71.16 (blue arrows). If the ETF gets to the Fibo level above that one -- $77.63 -- we'll have ourselves a nice 10.8% return. The iShares Russell 2000 ETF (IWM) tracks the performance of the Russell 2000 index. (The RUT is made up of the smallest 2,000 stocks in the Russell 3000.) The average company in the RUT has a market cap of around $2.5 billion. This fund is more liquid than IJR -- trading around 20+ million shares daily, and it has an expense ratio of 0.19 (19 basis points), which means it's a more expensive ETF than IJR. Fully 50% of the fund is made up of three sectors -- Healthcare, Industrials and Technology. Healthcare alone comprises almost a quarter of IWM's holdings (21%). IWM shared IJR's fate as the bottom fell out of the market earlier this year. It went from $169.07 on January 17th to $95.91 on March 23rd -- a decline of -43%. Since then it's gained +52%. Also, its 50-Day Moving Average (blue line) is getting very close to its 200-Day MA (red line). If the 50-Day passes the 200-Day we'll see the celebrated "golden cross". A very bullish sign. The ETF's price just broke above a key Fibonacci level at $141.54 and has its sights on the next level at $154.26. That's only 5.6% above its current price, but from there it could approach $170.47 Fibo level. That will give us a return of almost 17%. Not too shabby! Before you go... Chris Rowe is putting on an investor presentation this coming Tuesday, and I really think you should attend. The event is FREE, and Chris is going to show how you can select the best stock from a list of 27,377 stocks! (He's going to share a lot more than that of course, which is why seats in the event are filling up so fast.) You should go here now and save yourself a spot. Thank you as always for your time and attention. I will see you next week, Bill Spencer Editor-In-Chief, True Market Insiders HOW TO PICK THE PERFECT TRADE Instantly boost your trading capabilities and unlock massive profit potential for every trade! Click HERE RECENT STORIES Want to Make Consistent Money in the Market? The Most Accurate Indicator You've Never Heard Of The Best Traders All Have This "Superpower" Before You "Double Down" on a Losing Stock, Do This Instead… Copyright  ©   2020  True Market Insiders, All rights reserved. Our mailing address is: 33 SE 8th St, Boca Raton, FL 33432 Want to change how you receive these emails? You can  update your preferences   or   unsubscribe from this list DISCLAIMER The information contained herein has been prepared without regard to any particular investor's investment objectives, financial situation, and needs.  Accordingly, investors should not act on any recommendation (express or implied) or information in this material without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions. True Market Insiders LLC is not an investment advisor and is not licensed to give specific financial advice.   The chairman of True Market Insiders, Chris Rowe, is also the CEO, CIO and owner of Rowe Wealth Management LLC, which is not owned by and is not the owner of True Market Insiders. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources believed to be reliable ("information providers").  However, such information has not been verified by True Market Insiders or the information provider and TMM and the information providers make no representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein.  TMM and the information provider accept no liability to the recipient whatsoever whether in contract, in tort, for negligence, or otherwise for any direct, indirect, consequential, or special loss of any kind arising out of the use of this document or its contents or of the recipient relying on any such recommendation or information (except insofar as any statutory liability cannot be excluded).  Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.  Neither the information nor any opinion expressed shall constitute an offer to sell or a solicitation or an offer to buy any securities, commodities or exchange traded products.  This document does not purport to be complete description of the securities or commodities, markets or developments to which reference is made.   Unless otherwise stated, performance numbers are based on pure price returns, not inclusive of dividends, fees, or other expenses.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.    You should consider this strategy's investment objectives, risks, charges and expenses before investing.  The examples and information presented do not take into consideration commissions, tax implications, or other transaction costs.   The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Some performance information presented is the result of back-tested performance.  Back-tested performance is hypothetical (it does not reflect trading in actual accounts) and is provided for informational purposes to illustrate the effects of the True Market Insiders LLC strategy during a specific period.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Relative Strength is a measure of price momentum based on historical price activity.  Relative Strength is not predictive and there is no assurance that forecasts based on relative strength can be relied upon.   Back-tested performance results have certain limitations.  Such results do not represent the impact of material economic and market factors might have on an investor's decision making process if the investors were actually managing money.  Back-testing performance also differs from actual performance because it is achieved through retroactive application of a model investment methodology designed with the benefit of hindsight.  True Market Insiders believes the data used in the testing to be from credible, reliable sources, however; True Market Insiders makes no representation or warranties of any kind as to the accuracy of such data.  All available data representing the full platform of investment options is used for testing purposes.