Trading expert and author Ann Marie Beind appeared on Benzinga's PreMarket Prep on Monday morning to break down the recent price movements across the markets and explain which areas traders should focus on for profitable ideas.
One sector Baind expressed concern about was small-cap stocks, highlighting concerns about exit liquidity, where large market participants may sell their holdings as the market recovers.
“What I see is larger players using the $IWM surge as exit liquidity,” Beind said. “A big rally will cause people with large holdings of certain instruments to exit the market rather than enter it.”
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Beind further noted that some of the individual companies included in the iShares Russell 2000 Index ETF IWM are struggling with cash flow, and their stock price struggles may not necessarily be solely interest rate related.
“If you look at all the companies that are struggling with cash flow, I don't think it's all about interest rates,” Beind said. “That's why when you see interest rate notices, you just think, 'interest rates should be going up,' and they're not. There are other things besides interest rates that are correlated with this.”
Beind believes IWM's struggles have more to do with the underlying health of the companies that make up the index, rather than higher-than-usual interest rates, and he's looking elsewhere for attractive investment opportunities.
Beind noted that money appears to be returning to some software-as-a-service stocks, and said big tech companies such as Apple Inc. and Microsoft Corp. could be bought on the dip.
Check out Baiynd's interview here.
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Image: Anne Marie Baind/Midjourney