Hurd on the Street, April 2015

The stock market since our last article has added to its recent gains lead by strength in the Russell 2000 Growth Index and the NASDAQ Composite, each making all time new highs over the last couple of weeks. This suggests that the small cap segment of the market, which is our specialty, remains the place to be for the time being after a year of underperformance in 2014. One of the driving forces behind the move towards smaller companies is that with the U.S. Dollar up dramatically over the last 6 months, the impact is much greater on larger companies who typically rely more on foreign revenues to drive their top lines than their smaller counterparts do. This makes them less competitive and often leads to lower international sales and pressure on their bottom line.

Technically speaking, a number of the things that we were slightly concerned about last month have improved which gives us greater confidence that adding to stock holdings on market dips is the appropriate course of action. Individual chart patterns confirm this as the majority of stocks are in solid uptrends or close to breaking out of long bases. Also, sentiment measures suggest that investors remain underinvested which is bullish. We continue to focus on the healthcare and information technology sectors for new purchases and avoid all energy related groups for now.

Disclaimer: Rocket Capital Management is a registered investment adviser. The comments presented do not constitute personal advice and are not intended to be a solicitation for the purchase of any individual securities or investment strategies. All investing involves risk. Please consult with a registered adviser before making any investment decisions.