A Helpful Hazard

After what now looks to have been a shakeout in biotechnology stocks to start the week (gauging the IBB and XBI sector ETFs in addition to various individual names), bios are back in full swing to the upside this morning as the J.P. Morgan Healthcare Conference plays out in San Francisco.

Indeed, names like CLVS MNTA headlines some impressive percentage moves today. However, there are also quite a few coiled names we have been tracking with Members, such as AGIO. 

In addition to many smaller cap bios moving nicely, the small caps in the Russell 2000 Index are attempting to sustain rotation from the larger cap indices. In fact, as I write this I see the the IWM is higher on a percentage basis than the Dow, S&P, and Nasdaq.

Going forward, especially through the heart of earnings season the rest of January and into early-February, I suspect it will be key for bulls to maintain the small cap strength and eventually see them take out their prior all-time highs from September 2018. 

Finally, software stocks are jumping today as well. SCWX is a smaller cap buyout target we have noted previously. I am looking to see if names like that can get going for new legs higher as they would presumably be in one of the market's sweets spots now: Smaller cap biotech or tech trying to hold rotations as some of the extended mega cap names consolidate a bit. 

On the IWM ETF daily chart, below, we can see the potential for all small caps to break higher from a base dating back to just before Christmas--Once a hazard for bulls due to their lagging action, now the small caps may be a hazard for bears seeking a broad market correction.