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NYSE Insider Signals Shift to Small-Cap Stocks After Market Downturn

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  Published in Stocks and Investing on Monday, March 23rd 2026 at 12:23 GMT by CNBC
      Locale: UNITED STATES

New York, NY - March 23rd, 2026 - As the market attempts to regain its composure following a challenging week, seasoned NYSE insider Jay Woods, founder of Lightning Trading, is directing attention towards small-cap stocks as a potential avenue for recovery and growth. Speaking on CNBC's "Halftime Report" today, Woods signaled a possible inflection point in market sentiment, suggesting investors are growing weary of large-cap dominance and beginning to explore opportunities in smaller companies.

The previous week witnessed a downturn in key market indices, with the S&P 500 declining 1.2% and the Nasdaq Composite shedding 2.7%. This sell-off was largely attributed to underwhelming earnings reports from tech behemoths Apple and Microsoft, shaking investor confidence and triggering a wider market pullback. The disappointment with these traditionally reliable performers has seemingly sparked a reassessment of investment strategies.

"People are exhausted with large-cap stocks," Woods explained. "They've been the safe haven for so long, but the recent results have caused a shift. Investors are starting to look at some smaller companies, seeking potentially higher growth and untapped value." This move towards small-caps represents a classic rotation strategy, often observed when large-cap stocks become overvalued or face headwinds. Investors seek to redeploy capital into segments with more perceived upside.

However, Woods cautioned against a wholesale abandonment of established players. Instead, he advocates for a diversified approach, incorporating exposure to small-cap stocks alongside broader market ETFs. He highlighted several exchange-traded funds (ETFs) as potential tools for capitalizing on this emerging trend.

ETF Recommendations & Performance (as of March 23rd, 2026):

• Invesco QQQ Trust (QQQ): This ETF, focused on the Nasdaq-100, remains a strong contender despite the recent tech correction. Currently up 2.4% year-to-date, QQQ continues to offer exposure to leading technology firms, albeit with a heightened level of volatility. Woods acknowledges its continued relevance, particularly for investors comfortable with the tech sector's inherent risks.
• iShares Core S&P Small-Cap ETF (IWM): The ETF tracking the S&P Small-Cap 600 index is currently down 0.7% year-to-date. Woods sees this dip as a potential buying opportunity, suggesting small-caps have been unfairly punished by the broader market decline and may be poised for a rebound. He emphasizes the importance of rigorous research to identify fundamentally sound companies within this ETF.
• Vanguard Total Stock Market ETF (VTI): Providing broad market exposure, VTI is up 0.7% year-to-date. This ETF serves as a core holding for many investors and can be used to balance risk while participating in overall market gains. Woods views VTI as a solid foundation for a portfolio, complemented by targeted small-cap exposure.

Due Diligence is Key:

Woods strongly emphasized the necessity of conducting thorough due diligence before investing in any small-cap stock or related ETF. "You need to look at price action and momentum and do your homework," he stressed. "These are companies with real fundamentals, and you need to understand what those fundamentals are. Don't chase hype; focus on businesses with solid earnings, strong balance sheets, and a clear path to profitability." The relative illiquidity and higher volatility of small-cap stocks require a more discerning approach compared to large-cap investments.

He added that investors should be aware of the heightened risk associated with small-cap companies. They are often more susceptible to economic downturns, industry-specific challenges, and competitive pressures. Careful analysis of financial statements, industry trends, and management quality is crucial for mitigating these risks.

Risk Management: The Importance of Stop-Loss Orders

Given the current market volatility, Woods also highlighted the importance of employing risk management strategies, specifically stop-loss orders. "The market is still volatile, so you need to be careful," he advised. "Setting stop-loss orders can help protect you from significant losses and allow you to exit a position if the market moves against you." Stop-loss orders automatically sell a stock when it reaches a pre-determined price, limiting potential downside risk. This strategy is particularly relevant for volatile assets like small-cap stocks.

Looking Ahead:

The market's trajectory remains uncertain, but Woods' insights suggest a potential shift in investor focus towards small-cap stocks. While caution and due diligence are paramount, these smaller companies may offer a compelling opportunity for growth and diversification in the current environment. Investors are advised to monitor market conditions closely, analyze individual company fundamentals, and implement appropriate risk management strategies.