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Backed by positive economic announcements from the Empire Manufacturing Index and Industrial Production, along with much improved growth from Europe, the market broke its string of four losing sessions with the S&P gaining 0.6% and the recently weak Russell 2000 up a sturdy 1.2%. Virtually all sectors did well, led by Energy, Industrials and Financials. Energy was up by more than 1%.

Traders remain cautious with many betting on whether or not the Fed will announce the end of the QE3 stimulus bond buying program with the FOMC report on Wednesday. Perhaps the sudden enthusiasm by at least some of the leading economists for the tapering to begin is weakening the bears' grip on tapering as their chief weapon to keep the market overly cautious. Too early to say but that could be the impetus behinds today's buying spree. We will see what tomorrow brings, along with the remaining economic releases of the week. Those include Wednesday's Housing Starts (expected to be positive); Thursday's Initial Jobless Claims, the Philly Fed report, Existing Home sales, and the LEI; and then culminating in Friday's look again at Q3 GDP. If most of those are okay, as expected, then the Santa Claus rally may have started today.

The market continued to support mid-caps over small- or large-caps last week as Mid-cap Growth was the week's style/ cap leader but down 1.09%. The recently weak Small-cap Growth style was off 2.34% to bring up the rear last week. That all turned around for at least today based on the aforementioned Russell 2000's (IWM) strong performance.

Market Stats

Energy was the favored sector today, up well over 1%. Looking ahead, as you will see below, Technology seems to be the best bet among sectors over the next 30+ days. Financials follow closely, with Basic Materials, Industrials and Healthcare hitting or bettering the 50 Outlook mark.

We are cautiously optimistic with the recent uptick in economic numbers, the growing acceptance of the inevitable tapering, and worldwide economics finally starting to show signs of growth resumption. Nevertheless, we will continue our focus on undervalued growth companies in attractive sectors.

3 Stock Ideas for this Market

I selected the following stocks from a custom search looking for undervalued growth stocks with recent upward analyst revisions in MyStockFinder (*all data below from Yahoo! Finance):

Apple, Inc. (AAPL) -Technology

  • Trading 14x current earnings estimates and 11x forward earnings estimates
  • Analysts have revised earnings estimates up in the last 7 days
  • 9.6% projected EPS growth for the current year, 9.5% next year, 14% over the next 5 years

Arris Enterprises, Inc. (ARRS)-Technology

  • Trading for 11x forward earnings estimates
  • Analysts have revised EPS estimates up in last 30 days
  • 60% projected EPS for the current quarter, 84% next quarter, 38% over the next 5 years

JetBlu Airways Corporation (JBLU)-Industrials

  • Trading for 22x current earnings estimates and 13x forward earnings estimates
  • Analysts have revised EPS estimates up in last 7 days
  • 140% projected EPS growth for the next quarter, 34% next year, 22% over the next 5 years
Source: Possible Start To Santa Claus Rally