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Stock Market Looking Higher – Top When?
Bulls Are in Control Again
BraVoCycles Newsletter
January 07, 2026
Hey Market Timer!
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Today we will be covering...
Today, we will examine the debt burden and [un]profitability of Russell 2000 (small-cap) companies.
Small Caps – Debt & Profitability
Small caps face rising debt from 2026-2029.
They carry more short-term and floating debt, more sensitive to rate hikes.
Higher debt loads and reliance on credit mean rising interest rates will increase borrowing costs, squeezing profits.
If there is a recession, God forbid, in 2026 or later, the problems for small caps and possibly some S&P 500 companies will intensify.
42% of Russell 2000 companies have negative earnings.
That's 7 times and 3 times, respectively, compared to the S&P 500 and Russell Mid-Cap companies.
Increased interest rates and a potential earnings recession could create financial difficulties for many small-cap companies.
BraVoCycles on X
If you are interested in financial markets, you are missing out by not following me on X, as I do not have enough space in the newsletter to post all my research, which I try to share on X. Additionally, I frequently post important real-time updates between newsletters.
Yet another yellow/red flag about a dangerous market.
However, the long-term sentiment or overvaluation indicators may not short- to intermediate-term prospects of the stock market; they are not automatic sell signals.
What’s Next for the Stock Market?
The early-month positive seasonality worked again, despite missing the Santa rally.
Looks like the bulls will be in control again for some time. . .
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