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: