Tuesday, 8 January 2013

Mid-Caps still leading the way!

Looks like we are getting a classic January effect with mid- and small-caps; the FTSE Mid-250 index has clearly broken to new multi-year highs, while over the other side of the Pond, the small-cap Russell 2000 index has the beating of the large-cap S&P 500 index...

FTSE Mid-250 breaking out!

Russell 2000 surges ahead of S&P 500

Now while I would caution against unbridled enthusiasm for the stock market right now, given the recent rally, I would suggest that this mid- and small-cap effect has further to run this month. You can play this one of two ways: either -

1. Buy a FTSE Mid-250 mid-cap ETF (like the iShares FTSE Mid-250 index ETF, code: MIDD);
2. Buy a selection of mid- and small-cap UK stocks that are breaking to new 52-week price highs at present. 

For the latter, I can suggest looking at the top movers in the index, which according to Yahoo Finance UK today are: Miners Ferrexpo (FXPO) and Bumi (BUMI), plus aerospace & defence stock Chemring (CHG) and homebuilders Bovis Homes (BVS) and Barratt Developments (BDEV).

Disclaimer: I own shares in Chemring

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