Scott MartindaleGiven all the geopolitical drama and worrisome news headlines – ranging from tensions with Russia and North Korea to “Brexit 2.0” and “Frexit” to uncertainties of Trump’s fiscal stimulus to the looming debt ceiling – it’s no wonder stocks have stalled for the past several weeks. Especially troubling is the notable underperformance since March 1 in small caps and transports. Nevertheless, economic fundamentals both globally and domestically are still solid. Global growth appears to be on a positive trend that could persist for the next couple of years, and Q1 earnings season should reflect impressive year-over-year corporate earnings growth, although not without its disappointments – as we already have seen in bellwethers like Goldman Sachs (GS), Johnson & Johnson (JNJ), and International Business Machines (IBM).

I continue to like the prospects for US equities for the balance of the year. I expect breadth will be solid, correlations will stay low, and dispersion high such that risk assets continue to look attractive, including high-quality dividend payers and growth stocks, particularly small caps, which I think will ultimately outperform this year despite their recent weakness. All of this bodes well for stock-pickers.

In this periodic update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review Sabrient’s weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable ETF trading ideas. Overall, our sector rankings still look bullish, although the sector rotation model has, at least temporarily, moved to a neutral stance as the short-term technical picture has become cloudy. But after the pro-EU election results in France on Sunday, stocks may be ready for an upside breakout, no matter what Trump accomplishes in this final week of his first 100 days on the job.  Read on....

The stock market rally off the February lows initially was led by the usual combination of short-covering, oversold bottom-feeding, and speculation (on “junk"). But then market action started showing signs of improving market breadth and a rotation back into higher quality companies -- the types of companies with characteristics Sabrient typically seeks in our GARP (growth at a reasonable price) selection process. It is notable that price action for the S&P 500 was very similar during 2015 to what occurred in 2011.

Even with many of the global issues pushed off the front page, eager bulls found yet another reason to keep the troops in the barracks. The only newsworthy items are related to corporate earnings reports, which have been mixed at best, interspersed with the occasional spectacular report -- primarily from mega-caps like Google (GOOGL), Facebook (FB), or Amazon (AMZN). Some of the bulls have taken their chips off the table until after Labor Day, while others have merely scaled back to scalping some trades. Either way, stocks appear destined to thrash about for the rest of the summer.

Volatility reigned in January on elevated volume as stock investors shifted their focus from global events to U.S. earnings reports, which have ranged from amazing (e.g., Apple) to crushing (e.g., Microsoft). Although the earnings reports have brought plenty of surprises, the volatility is no surprise, as I and many other market commentators predicted for the New Year.

Scott MartindaleOnce again, stocks have shown some inkling of weakness. But every other time for almost three years running, the bears have failed to pile on and get a real correction in gear. Will this time be different?

Repeating Friday’s market performance, today, the S&P 500 sold off in the last 30 to 40 minutes, giving up its entire daily gain for a loss of 0.27%.  Nevertheless, it did gain 0.1% last week for its eighth consecutive weekly gain. 

david / Tag: VIX, AMZN, EBAY, MRVL, NUS, NXPI / 0 Comments

Thunder is good, thunder is impressive; but it is lightning that does all the work.” — Mark Twain

If you go by Wall Street’s scorecard, the economy seems to be going gangbusters, as evidenced by the upward trajectory of the major equity indices.

daniel / Tag: SPX, DJIA, NASDAQ, COMP, GOOG, AMZN, EBAY, PCLN, YHOO, CRM, NFLX, AKAM, LNKD, FB, consumer sentiment / 0 Comments

I am always doing that which I can not do, in order that I may learn how to do it.” -- Pablo Picasso

So now the fun really begins.

That is, if you consider fun the sort of thing that happens when Wall Street has way too much information to process in a very short period of time.

daniel / Tag: VIX, VXX, FDN, DJIA, SPX, COMP, GOOG, AMZN, EBAY, PCLN, YHOO, CRM, NFLX, AKAM, FB, LNKD / 0 Comments

You must live in the present, launch yourself on every wave, find your eternity in each moment. -- Henry David Thoreau

Well, that party didn’t last long, and the hangover was on the nasty side.

Wall Street had a few days to entertain a little early-week exuberance as a couple of Fed-centric news cycles spurred the equity market towards yet another round of record highs. That exuberance, however, was severely “tapered” when a conflicting message from another Fed officer sent the market reeling towards steep losses, cutting into its midweek gains.

"The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand.”—Sun Tzu

Don’t look now, but the Dow could easily end the year about where it started. All it will take is another few rounds of weaker-than-expected earnings reports to seal the deal, accompanied by a resultant move downward of about 7% for the Blue-Chip index.

daniel / Tag: DJIA, SPX, NASDAQ, APPL, AMZN / 0 Comments

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