Most investors have heard the term ‘Magnificent Seven’ at some point over the years, which contains the Big Tech stalwarts Alphabet (NASDAQ: GOOG), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Meta Platforms (NASDAQ: META), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA) and Tesla (NASDAQ: TSLA). Business news outlets have provided ample coverage for these Big Tech titans, as they have been the driving force for the overall market rally for quite some time. The artificial intelligence boom has only fueled the seemingly impervious Mag Seven.
However, a recent shift in the markets has emerged recently. The rest of the stock market is now gaining steam and once again catching the attention of investors. Searching for stocks with more reasonable valuations compared to the sky-high Mag Seven, as well as anticipating interest rate cuts in the months ahead, investors have begun warming up to the broader stock market again.
AI Plays Lose Steam, Small-Caps Re-Awaken
The stunning rise of AI over the past year has led to an incredible rally for Big Tech and other associated companies. For example, semiconductor companies, that produce vital chip components that enable AI to operate, have outperformed the overall stock market in the past year.
The PHLX Semiconductor Index (SOX) has rallied over 25% YTD in 2024 and is up over 41% in the past year. By comparison, the S&P 500 (SPX) has gained 14.5% YTD in 2024 and just under 20% in the past year. However, as fears of an AI bubble have come more into focus and focus has shifted to underappreciated areas of the overall market, the SOX index has declined 4.14% over the past month.
Small-cap stocks, on the other hand, have been largely in the gutter for quite some time. In fact, small caps have not been this cheap relative to large-cap stocks in 25 years. However, the shifting market sentiment over the past month has re-awakened the beaten-down area of the market. The Russell 2000 Index (RUT), a leading small-cap index of stocks, has surged 10.70% in the past month alone.
The rotation out of AI and mega-cap tech into small-caps and broad markets seems just to be beginning. For savvy investors, there are plenty of opportunities to be found across the small-cap arena.
This Small-Cap Stock Has Bullish Technicals Backed By Solid Fundamentals
Texas-based human capital management (HCM) solutions provider, Asure Software (NASDAQ: ASUR), is one such small-cap stock that could strongly benefit from the renewed attention to non-AI Big Tech. Asure offers a wide range of HCM solutions for small to mid-sized companies that help them manage their employees. From payroll and taxes to regulation adherence and employee retainment, Asure provides a full-service approach for SMBs at a time when small businesses have been focusing on optimizing their operations.
Asure’s stock chart is looking quite impressive as well. On the daily chart, the recent move higher has the stock nearing a “golden cross,” which occurs when the 50-day moving average crosses above the 200-day moving average. Furthermore, the ADX indicator, which measures the strength of a trend, has moved to the highly watched 30 level. This indicates that the uptrend is very strong.
Moving to the weekly chart, the bullish move appears to still be in the early stages. One of the key factors supporting this is the moving average convergence divergence (MACD) indicator, which has just recently crossed above the zero line. This is a very bullish signal that can mark the beginning of an overall trend higher. On the regular moving averages, the 50-day MA appears like it could be heading for a bullish bounce off the 200-day MA.
Investors should keep an eye on is Asure’s planned second-quarter financial results release set to go out on August 1, 2024. Management previously set guidance for Q2 2024 with a revenue range between $28 million to $29 million and adjusted EBITDA between $4 million and $5 million. Investors await the Q2 results to see how Asure’s quarter fared relative to its estimates, as well as any forward-looking insights into Q3 and beyond.
Disclaimer:
Spotlight Growth is compensated, either directly or via a third party, to provide investor relations services for its clients. Spotlight Growth creates exposure for companies through a customized marketing strategy, including design of promotional material, the drafting and editing of press releases and media placement.
All information on featured companies is provided by the companies profiled, or is available from public sources. Spotlight Growth and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever and we are not qualified to give financial advice. The information contained herein is based on external sources that Spotlight Growth believes to be reliable, but its accuracy is not guaranteed. Spotlight Growth may create reports and content that has been compensated by a company or third-parties, or for purposes of self-marketing. Spotlight Growth was compensated four thousand dollars cash by Asure Software for the creation and dissemination of this content by the company.
This material does not represent a solicitation to buy or sell any securities. Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to the Company’s plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management.
The above communication, the attachments and external Internet links provided are intended for informational purposes only and are not to be interpreted by the recipient as a solicitation to participate in securities offerings. Investments referenced may not be suitable for all investors and may not be permissible in certain jurisdictions.
Spotlight Growth and its affiliates, officers, directors, and employees may have bought or sold or may buy or sell shares in the companies discussed herein, which may be acquired prior, during or after the publication of these marketing materials. Spotlight Growth, its affiliates, officers, directors, and employees may sell the stock of said companies at any time and may profit in the event those shares rise in value. For more information on our disclosures, please visit: https://spotlightgrowth.com/disclosures/
The post Broad Stock Market Rally Gaining Steam As Investors Eye Potential Rate Cuts appeared first on Spotlight Growth.
