Risk On

Markets gapped higher and stayed in a tight range to close out Monday's session. However, small and micro cap stocks led the way higher and they closed above their respective trendlines.

Chart Advisor | Focus on the Price By Gordon Scott, CMT Monday, November 04, 2019 1. Investors Show Willingness to Take Risks 2. Douglas Dynamics Plows Higher 3. Microsoft Moving Up in the Cloud Market Moves Markets gapped higher and stayed in a tight range to close out Monday's session. However, small and micro cap stocks led the way higher and they closed above their respective trendlines. This could signal that investors are much more willing to take on risks than they have been in the past several months. During the month of October the iShares Russell 2000 ETF (IWM) for small cap stocks, and the iShares Microcap ETF (IWC) for micro cap stocks, outpaced the large-cap indexes for the first time all year.   Perhaps because the major U.S. stock market indexes extended their streak of calm trading days, investors are anxious to seek out gains. In what is now the seventeenth straight trading day, the S&P 500 (SPX), the Nasdaq 100 (NDX) and the Dow Jones Industrial Average (DJX) all exhibited a downtrend in their average true range. This is often a bullish signal, but it also describes markets that are not rising as fast as they had been in previous weeks and months. When such action takes place, investors get impatient and seek out greater opportunities for growth.        Douglas Dynamics Plows Higher Douglas Dynamics (PLOW), a maker of truck parts and snow-plow equipment, is the best performing microcap stock in the top ten holdings of the  iShares Microcap fund (IWC). The stock price is up nearly 40% in 2019. The company continues to outperform expectations and dividend payments provide a yield of two-percent per year. The company will report its earnings tomorrow (Tuesday) about 30 minutes after the market opens.     Read more: How Bearish Corporate Earnings Are Broadening the Bull Market Rally Microsoft Shares Are Surging With Huge Demand  Odd Lot Trading On the Rise Microsoft Moving Up in the Cloud Microsoft's (MSFT) cloud-services offerings have finally begun to come into their own and investors have noticed. Shares of Microsoft have held above the resistance level they broke through after announcing the company had won a multi-billion dollar government contract for cloud services. Today's price action reinforced the notion that institutional sellers want to take profit as the stock sold off mildly from the beginning of today's session to the end. The real question is whether or not the current cluster of prices above old resistance level will be followed by a drop in prices back into the old trading range. Such a price action would be a bearish signal.     The Bottom Line Stocks closed higher again today despite holding a tight trading range. Small cap and micro cap stocks seem to be outpacing larger cap stocks in the final quarter of the year. Among such stocks Douglas Dynamics is a standout. Microsoft also has interesting trading dynamics, but if the stock price drops sharply it could be a bearish signal for not only MSFT shares but the larger market as well.  How can we improve the Chart Advisor? Tell us at chartadvisor@investopedia.com Enjoy the Chart Advisor?  Copy and share the link below to invite friends to sign up https://link.investopedia.com/join/53o/00-fwd-chartadvisor CONNECT WITH INVESTOPEDIA Email sent to:  mondemand.forex@blogger.com If you wish to update your newsletter preferences or unsubscribe, please click here   114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC. All Rights Reserved | Privacy Policy