Despite a significant amount of global turmoil, markets are surging ahead and giving interested investors nice returns. Stocks motored briskly higher over the past week with a devil-may-care attitude, shrugging off renewed concerns about European debt, bad news on the nuclear emergency in Japan, intensified air-to-ground fighting in Libya, renewed unrest in Syria and several undesirable data points on the U.S. economic recovery.
The Dow Jones Industrial Average rose 3.05%, the Standard & Poor's 500 Index rose 2.7%, the Nasdaq Composite rose 3.7% and the Russell 2000 small-caps rose 3.7%. Growth mid-caps, our favorite cross-market group, climbed 3.2%.
Despite the power of the rally, it was impossible to pinpoint a catalyst other than to observe that risk appetites were whetted by lower prices for those who believe a global economic recovery is under way. Just as stocks blew off a terrible housing number on Wednesday, they shrugged off a lousy durable goods number Thursday, taking heart instead at an improvement in unemployment claims. The next touch point on jobs will come next Friday, when the March estimates will be reported by the U.S. Bureau of Labor Statistics. It will be probably be another fairly strong reading, around +175,000.
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The improvement in overseas markets is striking when looking at global market growth. You probably know already that my pick of Market Vectors Indonesia Index ETF (NYSEARCA:IDX) a couple weeks ago on the rebound off its 200-day average is going strong, up a whopping 2.9% on Thursday to a three-month high, as shown above. But all emerging and developed world markets outside the United States were up nicely as well, +1.2%. Among the best were iShares MSCI South Korea Index Fund (NYSEARCA:EWY), +2.2%.
Among market cap groups, which my research shows is the best single way to play a big rebound, iShares S&P MidCap 400 Growth ETF (NYSEARCA:IJK) was again the big winner due to the way it crosses sector lines, up 1.2% on Thursday. In the chart above, you can see why we are so high on mid-cap growth for streamlined portfolios. It rose the fastest out of the November low last year, rose the most by January, fell the least in the recent unpleasantness, and has rebounded the fastest since.
Pretty much the same as the past two years. Virtually all negative episodes in the market since the March 2009 reversal have ended in pain for short-sellers. The recent dip has been a bit deeper than others of the past six months, but about the same as last August.
Just look at the appeal of companies like EV Energy Partners LP (NASDAQ:EVEP). It is just your basic oil and gas driller in the Appalachia basin, nothing special, but higher commodity prices plus a 6.3% yield have put it in the crosshairs of fund managers desperate to add yield to capital appreciation. This is one of the most important dynamics at work today, so make sure you are taking advantage.