Capitalize on This Small-Cap ETF's Key Differences

Investing in exchange-traded funds ("ETFs") doesn't need to be boring... Even within investing categories, you can find meaningful differences. [Chaikin PowerFeed]( Capitalize on This Small-Cap ETF's Key Differences By Marc Gerstein, director of research, Chaikin Analytics Investing in exchange-traded funds ("ETFs") doesn't need to be boring... Even within investing categories, you can find meaningful differences. The approach to capitalizing on these differences is similar to how we hunt for 10-bagger opportunities. [And as I explained recently]( the process is simple to understand... 1. Start with an open mind. 2. Use a sensible investment approach. 3. Be willing to explore obscure corners of the ETF universe. In a sense, small-cap value stocks are obscure by definition... After all, most folks think "growth" when small caps are mentioned. And frankly, that makes sense. Small caps typically either grow into larger companies or go bust. But right now, the Power Gauge is alerting us to an unusual opportunity in this space... It's flashing a lot of "bullish" or better marks for small-cap value stocks. And as you'll see today, a little extra digging can help us spot the best opportunities in the bunch... Recommended Links: [MUST SEE: $890 Billion Flooding Into This ONE Tiny Sector]( One senior analyst has followed a strange trail of spending coming from Washington D.C. Nearly $1 trillion in government funding is being pushed into ONE tiny, nearly forgotten U.S. sector. It's creating a massive industry boom that's practically certain to end in six different 1,000% gains... no matter what the markets do next. But with a new bill passing in the White House, time is running out to stake an early claim. [You can still get the details right here](. [Oil's New Inflection Point (Prepare NOW)]( A new turning point for oil could drastically alter our economy this year. Goldman Sachs says it's the crux of their next 2022 play... and numerous top hedge funds have just changed their oil positions. [Click here for this full oil story](. These days, the Power Gauge increasingly favors value. It cares more about quality, too. And I've noticed a tilt toward small caps. Obviously, we could screen for individual stocks with all three qualities. But a lot of folks like the "one click" ease of ETFs. And fortunately, several ETFs fit these criteria today... The giant iShares Russell 2000 Value Fund (IWN) is one of the most popular small-cap ETFs, for example. And the Power Gauge ranks IWN as "very bullish" today. However, that ETF's "Power Bar" ratio is underwhelming. IWN currently holds 410 favorably ranked stocks. And it holds 224 unfavorably ranked positions. The ratio of IWN's favorably-to-unfavorably-ranked stocks (1.8) works out to a "neutral" rank compared with other U.S. ETFs. It's also "neutral" on a portfolio-weighted basis. But digging further, I noticed the Royce Quant Small-Cap Quality Value Fund (SQLV)... The Power Gauge also ranks this ETF as "very bullish" today. And more importantly, the system currently views its holdings much more favorably than IWN's holdings... SQLV's Power Bar ratio is 3.5 today. It has 91 favorably ranked stocks and only 26 unfavorably ranked stocks. And compared with other U.S. ETFs, it's "bullish" ranked. If you want another key difference, SQLV starts with a big advantage over IWN as well... SQLV holds 235 stocks with Power Gauge rankings. Meanwhile, IWN currently owns shares of 1,320 ranked stocks. That's significant for a simple reason... It's hard to gain an edge while owning such a big portion of the total eligible universe (about 2,000 stocks). In other words, IWN basically just tracks the entire small-cap market. Now, before we wrap up, I need to address another aspect of searching for the best opportunities in obscure corners like small-cap value. These ETFs can be incredibly small. For example, SQLV's assets under management only total about $19 million. But importantly, the liquidity of an ETF is based on the liquidity of the securities it owns. It isn't based on the size of its portfolio. So that isn't a huge concern for us as investors. In the end, [we've entered a new world in 2022](. We're now in a "stock picker's market." We can no longer count on falling interest rates to shield us from bad investment choices. And stock selection is far too important to rely on generic outdated ideas of value investing. For this new world, I prefer SQLV. And the Power Gauge helps us see why. Good investing, ​​​​​​Marc Gerstein Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +0.70% 9 18 3 S&P 500 +0.18% 166 269 60 Nasdaq -0.23% 36 46 18 Small Caps -0.04% 562 977 309 Bonds +0.42% Consumer Staples +1.13% 16 14 0 — According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish.. Major indexes are mixed. * * * * Top Movers Gainers [rating] TTWO +7.22% [rating] WMT +5.11% [rating] BBWI +4.67% [rating] TGT +4.57% [rating] CCL +4.48% Losers [rating] MRNA -4.99% [rating] SEDG -3.98% [rating] DISH -3.71% [rating] EMBC -3.26% [rating] UHS -3.00% * * * * Earnings Report Reporting Today Rating Before Open After Close KEYS, SNPS ADI, TJX AMCR, CSCO, LOW BBWI, TGT No earnings reporting today. Earnings Surprises [rating] A Agilent Technologies, Inc. Q3 $1.34 Beat by $0.13 [rating] WMT Walmart Inc. Q2 $1.77 Beat by $0.17 [rating] JKHY Jack Henry & Associates, Inc. Q4 $1.10 Beat by $0.10 [rating] HD The Home Depot, Inc. Q2 $5.05 Beat by $0.12 * * * * Sector Tracker Sector movement over the last 5 days Discretionary +6.50% Financial +5.79% Materials +5.65% Communication +5.33% Industrials +5.00% Information Technology +4.74% Staples +3.53% Utilities +3.21% Energy +2.69% Real Estate +2.64% Health Care +1.96% * * * * Industry Focus Bank Services 26 62 12 Over the past 6 months, the Bank subsector (KBE) has underperformed the S&P 500 by -7.10%. However, its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #9 of 21 subsectors. Top Stocks [rating] ESNT Essent Group Ltd. [rating] NMIH NMI Holdings, Inc. [rating] FCNCA First Citizens BancS * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. 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