Smaller U.S. companies that have a higher exposure to the U.S. and less exposure abroad in terms of revenue and profit would be more insulated from international trade disputes, which has caused more investors to shift toward the small-cap segment.
According to FactSet data, Russell 2000 companies generate 79.4% of revenue from the U.S. exposure, whereas 69.7% of the S&P 500’s revenue exposure comes from the U.S.
“One week after a signal, the SPX has gone on to average a return of 2.1% — about 10 times its average anytime one-week return of 0.2%, looking at data since 2008. Two weeks out, the S&P was up 3.3% — again, roughly 10 times the norm — with a positive rate of 88%,” according to Schaeffer’s.
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Tom Lydon’s clients own shares of QQQ.