Big Tech Breaking Down?

Hey, Ross here:

Is Big Tech breaking down?

Let’s take a look.

Chart of the Day

This is the Magnificent 7 ETF.

It’s now down about 11% from its recent high, and lower by 3.5% on a year-to-date basis.

Meanwhile, look at XMAG – an ETF which tracks the S&P 500 minus the Magnificent 7.

Think of it as the S&P 493.

And while it pulled back from its recent high yesterday, it’s still nearly 13% higher on a year-to-date basis.

In other words, the S&P 493 is trouncing the Big Tech Mag 7.

The smaller, less popular stocks are winning.

Now, of course, you can say that the S&P 493 are also large-cap stocks. Fair enough.

But take a look at the third chart below.

This IWM/IWB…

The ratio between the small-cap Russell 2000 and the mid/large-cap Russell 1000.

As you can see, this ratio has just broken out past a clear resistance level…

Meaning small-caps have just blown into an area of outperformance.

I think now is a great time to target these smaller stocks.

But there’s an important caveat to understand first.

I explain below.

Insight of the Day

You MUST pick and trade small-caps.

Plenty of investors out there just dollar cost average into the S&P 500.

You’ll get average returns, but it’s a decent option – especially for your long-term retirement accounts.

But when it comes to small caps, I don’t recommend you do that.

You see, the truth is – most small-cap companies are trash.

The good ones that rise to the top eventually outgrow their small-cap status…

Meaning by definition, small-cap indexes are the “bottom of the barrel”.

That’s why I believe you MUST pick and trade small caps – you can’t hold them long term.

The problem is, of course, there are literally thousands of small-caps stocks out there…

Many of which have little to no analyst coverage and information.

They are truly “underground” stocks.

I’ll be explaining more on how to target the highest-potential “underground” trades later this week…

So make sure you keep an eye out for that.

In the meantime…

Here’s the $3 stock I’m buying even as Wall Street is panic selling.

Customer Story of the Day

“Ross is great at explaining and guiding me through everything he is teaching.

I’m learning more every time I listen to him and I had no experience whatsoever before I began to watch his material.

His team so far has been amazing and very responsive.

Thank you, I’m excited to continue learning.”

Ross Givens
Editor, Stock Surge Daily