Stealth Correction?

This sure feels like a stealth correction. That is a period where the conservative stock leaning S&P 500 is about breakeven while smaller, riskier stocks are getting their clocks cleaned.

That certainly sounds like Monday where the S&P gave up a meager -0.3% while the Russell 2000 got pummeled by -1.4%. Talk about a night and day difference.

Sometimes these periods are precursors to broader sell offs. Sometimes it is just a bit of house cleaning before the market surges higher with the smaller stocks leading the charge.

Which case will it be this time?

The answer lies in this earnings season. In particular, how optimistic companies feel about the year ahead. Let's keep our focus on that to determine our trading strategy.

Best,

Steve Reitmeister

Executive Vice President, Zacks Investment Research

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