What the Market Wants: It's a Jumble Out There
It's a Jumble Out There
by David Brown, Chief Market Strategist, Sabrient Systems
I’m sorry to admit it, but your opinion of what the market wants is probably just as good as mine this week because there’s just a jumble of confusion out there. To give you an example, here are a couple of facts. The concern about the weakness of the euro eased somewhat last week, which was good for the market. The U.S. employment report was negative in virtually every respect, which should have been bad, but the markets shrugged it off and went right on up, and surprisingly, stocks one would normally think of as “defensive” stocks underperformed.
More facts: Retailers reported solid numbers for the Thanksgiving holiday period and for the month of November, and regional banks did surprisingly well. But despite the daily $8 - $9 billion gift from the Permanent Open Market Operations (POMO), Treasuries fell.
You can see what a jumble this is.
Market Stats. The markets were up broadly last week, led by Mid-cap Value, up +3.47%, followed by the quintessentially top-performer Small-cap Growth, up +3.18%. Even the laggard in this jolly good week, Large-cap Growth, was up + 2.71%.
From a sectors viewpoint, Basic Industries were up a whopping +5.95%, as if the country’s basic industries are assured of a rosy future with nothing to worry about. Capital Goods were in the same ballpark, up +4.41%. Third in line was Energy, up +4.31% despite that sector’s recent weakness. And as I mentioned above, the normally solid defensive stocks, such as Health Care, Utilities, and Consumer Non-durables, were the three weakest sectors, up a little more than 1% each.
See? More jumble.
Our forward looking sector model (SectorCast) isn’t a lot different from the week before, although Finance has leaped to the top, with Basic Industries in second place and Energy in third. Keep in mind that this sector model is 100% forward looking, as opposed to momentum-based, so last week’s actual sector performance has nothing to do with the rankings in the SectorCast. The worst sectors in our forward model are once again Consumer Services, Consumer Durables, and Transportation.
I’m sorry, but your guess is as good as mine as to where we go from here. Be careful. Stay hedged.
4 Stock Ideas for This Market
This week, I started with Sabrient’s GARP (Growth At a Reasonable Price) preset search on MyStockFinder (http://MyStockFinder.com) to identify Strong Buys that are still priced well relative to their growth prospects. Below are four stock ideas worth considering:
Torchmark Corp. (TMK) – Financials
Telular Corp. (WRLS) – Technology
Tyson Foods (TSN) – Consumer non-Durables
HealthSpring, Inc. (HS) – Healthcare
Until next week,
David Brown
Chief Market Strategist
Sabrient Systems, LLC
Leaders in Investment Research
http://www.sabrient.com
and http://Twitter.com/ScottMartindale
Full disclosure: The author does not personally hold any of the stocks mentioned in this week’s “Stock Ideas.”
Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.