The ASX200 was down a mere 2 pts and the AXSO (*********) down 0.7% but microcaps have had generally a rather bad outing this afternoon. The downdraft is unexpected given the Dow's rise overnight and positive futures but it appears liquidation in the riskier end has commenced.
I still track Opportunity Stocks and with exception of the gold stocks, they have performed worse today than other previous days when the market was in more bearish mode (indices wise).
I am concern on days results announcements are made for microcaps. ANO today suffered a 29% fall to below $4 at $3.90 after even reporting 200% NPBT gain and a 267% NPAT gain - it appears the results weren't good enough for the market which probably had expected a lot more. VHT too went as low as $1.34 despite a generally positive business update. PME also fell 5.2% as did NXS a large 8.9%, suggesting that stocks that once had the most momentum are now facing the crunch.
So I guess IMO a few learnings from here -
1. You cannot ever rely on the indices as a proper or even reasonable barometer for market sentiment especially in the microcap space. Individual microcaps fall harder than what the indices tell you.
2. Stock performance for microcap does not necessarily correlate with Dow overnight performance, if people are using that to determine if and when they should sell. Today's downdraft is an example that people are starting to reduce risk in the sector
3. Results announcements which we tend to believe would be positive for microcaps , are more likely to be more negative for the stock price either because it is a reminder of negative and/or dwindling cashflows, lower than expected results or a less favourable outlook than has been anticipated or baked into the share price.
4. Time to consider procrastination over reducing microcap exposure and getting rid of Dog Stocks
I may have been a day or two earlier to close off Opportunity Stocks but they're now at returns lower than when it was closed.
