Tuesday, April 16, 2013

NYSE MKT Composite Index Of Small Growth Companies Is At Inflection Point ($XAX)

Look at this long-term chart of the NYSE MKT Composite Index (formerly the NYSE AMEX Composite Index and AMEX Composite). It is an interesting index. According to NYSE Euronext, "NYSE MKT is the premier U.S. equities market for listing and trading of small growth companies."

$XAX has been bouncing up against 2007 resistance since early 2011 (see below), and is now trading in a tight sideways channel with rollover risk. So judgment day is here. Chris Martenson recently told Lauren Lyster on Yahoo Finance's Daily Ticker that he sees the S&P 500 falling by 40% from here (by fall), regardless of the Fed's QE-infinity program. And usually small caps are more volatile on the downside... So as "sell in May and go away" approaches (who made that up?), it is probably a decent time to monitor downside risk here, in my opinion.

source: stockcharts.com

Here is more info on the companies listed on NYSE MKT from that press release. See the full list here.

"As of December 31, 2011, there were more than 450 issuers listed on NYSE MKT. In 2011, 30 new listings and 4 transfers joined the platform. Year to date in 2012, 8 new listings have joined NYSE MKT, including: Radiant Logistics, Inc (RLGT), GigOptix, Inc. (GIG), Alderon Iron Ore Corporation (AXX) and NovaCopper Inc. (NCQ).

Companies seeking to list on NYSE MKT are required to meet one of the following standards:

1. $750,000 pre-tax income; $3 million market value of public float; $3 minimum price; $4 million stockholders equity
2. $15 million market value of public float; $3 minimum price; 2 year operating history; $4 million stockholders equity
3. $50 million market capitalization; $15 million market value of public float; $2 minimum price; $4 million stockholders equity
4. $75 million market capitalization; or (at least $75 million in total assets and $75 million in revenues); $20 million market value of public float; $3 minimum price"

For example, and in no way am I recommending this stock, Reed's Inc. ($REED), a company that sells Ginger Beer at Trader Joe's and Whole Foods, moved from the NASDAQ to NYSE MKT on December 31, 2012. It has a market cap of $54 million with $30 million in revenue (TTM).

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