Despite bursts of outperformance, small- and mid-cap stocks (SMID) have underperformed large-caps year to date -- as they have over the past five years. But they may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the trade and tariff debate, or fallout from unrest in the Middle East, the Russian invasion of Ukraine, issues in China, or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps. Finally, there are long stretches in the record books when SMID stocks have outperformed large-caps. SMID stocks can be risky, but despite those risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 20% of the U.S. stock market's capitalization is comprised of SMID stocks.

Tuesday was a strange day for the S&P 500 (SPX) as all the losses occurred by 10:00 a.m. After that, the index went sideways, trading in a range between 5,598 and 5,628 for the rest of the session. The other major indices did the same thing as market participants seemingly decided to take the rest of the day off. Market breadth cooled after two straight days of strength. Consumer Discretionary dropped 1.8% (as TSLA fell another 5%), Information Technology dipped 1.5% (as NVDA and AVGO fell 3%), and Communication Services fell 1.4% (on a 2.3% drop in GOOGL and a 3.7% drop in META). Even the defensive Consumer Staples sector gave back over 1%. Energy saw a minor 0.2% gain. According to stockcharts.com data, the stock market posted two breadth thrusts in a row (on Friday and Monday) after a 10% correction. While this does not rule out a retest of the lows or a lower low, returns going forward from two months to a year almost always have been very good. NYSE advances/total issues were in the low 80%, while NYSE advancing volume/total volume was between 88% and 90% on those two days. Gamma Exposure, which refers to the sensitivity of existing option contracts to changes in the underlying price of the S&P 500, has dropped into an extreme area that historically has been bullish for stocks in the intermediate term. In addition, the SKEW Index, which is an indicator designed to measure market risk at any given point in time, has flashed a bullish sign based on its 13-week rate-of-change. Obviously, market conditions remain quite fluid and headline risk certainly has not disappeared. (Mark Arbeter, CMT)

Hewlett Packard Enterprise was spun out of Hewlett Packard Inc. (now known as HP Inc.) in November 2015. Hewlett Packard Enterprise provides core IT gear including high-performance computing and mission critical servers; industry standard servers; storage and networking gear; and financing services. In 2017, HPE spun off its IT outsourcing, BPO, and applications services unit and its noncore software business. Niche acquisitions include Nimble (all-flash storage), SimpliVity (converged infrastructure), and Cray (super-computing). In 2024, HPE announced the planned acquisition of Juniper Networks.

As stock prices continue to fall, there is little in the weekly insider-sentiment data from Vickers Stock Research to suggest insiders sense opportunity. No, they are not jumping overboard -- but history tells us that when insiders sense a bottom, they are quick to act. And Vickers' data does not suggest that is yet the case. The volume of weekly insider transactions popped this week, partially as earnings season is pretty much over and most insiders are free to trade again. But even so, the jump is larger than expected, with almost 2150 transactions meeting the criteria for inclusion in Vickers' Weekly Insider Report. That's up from 1336 last week. So insiders have been active. On the numbers, Vickers' Total Eight-Week Sell/Buy Ratio is now 4.96, this on a scale where the neutral range runs from 2.00 to 6.00, and anything higher is bearish. Again, there is no sign of full-on panic. But even with the S&P 500 down about 7% over the past month and the Nasdaq down about 11% in the same time, insiders are still not 'jumping in.' That suggests there may be more pain to come for investors. On a sector basis, buying was the greatest in Energy last week, with shares valued at $32 million bought versus $12 million sold. Buying was also notable in the Materials, lagging the level of selling by a factor of just 1.3-times. On the other side of the coin, selling was the greatest in Consumer Discretionary, with shares valued at $373 million sold versus $9 million bought, as well as Healthcare, with $341 million sold versus $27 million bought. This week, analysts at Vickers highlighted insider transactions of interest at Moderna Inc. (NGS: MRNA) and Strategic Education Inc. (NGS: STRA).