Monday Tee Up: Jobs and the Fed

Monday Tee Up: A Huge Earnings Week

Inflation, a possible recession, higher interest rates, and higher gas prices. Consumers don't want to hear it. They want to go out and eat. They were denied that experience during the pandemic and are making up for lost time with "revenge eating" and "revenge travel." In the September retail sales report that caused a fuss last week, the category of "Food Services and Drinking Places" was ranked number one for growth, up nearly 12% in the first nine months of 2023 (compared to the same period a year ago). No other category was even close. For sure, the restaurant sector has some headwinds. One is chicken prices. The price of chicken is at an all-time high, at $1.96 per pound, up 33% in August 2023 from two years ago. Of course, chicken is one of the most-popular menu items across the range of restaurants -- from fast food to casual dining to formal dining. Restaurants, as best they can, try to pass on higher prices to patrons. But at some point, patrons won't bite (pun intended.) Next to consider are obesity drugs. Some analysts worry that these now-popular drugs will curb appetites and stop consumers from snacking. Argus' restaurant analyst John Staszak, CFA, is keeping an eye on the impact of these obesity drugs. But based on their high prices and possible safety issues, John sees only a slightly negative impact for now. Argus has an Over-Weight rating on the Consumer Discretionary sector. Here are some Argus BUY-rated restaurant stocks that might well show EPS growth over the next year.

Stocks edged lower on Wednesday morning, extending Tuesday's selloff amid continued concerns about high interest rates and the approaching U.S. government shutdown. Manufacturing data was stronger than expected. The Commerce Department said that durable goods orders rose 0.2% from the prior month in August, up from a sharp 5.6% drop in July and better than the Reuters consensus call for a 0.5% decline. Core capital goods orders rose 0.9% in August after a decline of 0.4% in July. The Dow fell 0.3%, the S&P 0.1%, and the Nasdaq 0.1%. Crude oil traded near $94 per barrel, while gold fell $22 to $1898 per ounce.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are Old Dominion Freight Line, Inc (ODFL); D.R. Horton Inc. (DHI); Northrop Grumman Corp. (NOC); Albemarle Corp. (ALB) and the Focus List deletions are Corteva Inc (CTVA); Sonoco Products Co. (SON); RTX Corp. (RTX); Cracker Barrel Old Country Sto (CBRL).

Stocks fell sharply on Thursday morning on concerns about the economic impact of additional Fed rate hikes. The CME FedWatch Tool currently projects a 95% likelihood of a rate increase in late July amid continued strong labor market data. Payroll provider ADP said that U.S. companies added 497,000 payroll jobs in June, well above the Bloomberg consensus forecast of 225,000. The Dow fell 1.4%, the S&P 1.2%, and the Nasdaq 1.3%. Crude oil fell nearly 2% to $70.50 per barrel, while gold traded near $1915 per ounce.

Stocks fell sharply on Thursday morning on concerns about the economic impact of additional Fed rate hikes. The CME FedWatch Tool currently projects a 95% likelihood of a rate increase in late July amid continued strong labor market data. Payroll provider ADP said that U.S. companies added 497,000 payroll jobs in June, well above the Bloomberg consensus forecast of 225,000. The Dow fell 1.4%, the S&P 1.2%, and the Nasdaq 1.3%. Crude oil fell nearly 2% to $70.50 per barrel, while gold traded near $1915 per ounce.

The dollar has drifted 5% from cycle highs in the year to date, falling in part as the outlook for further Federal Reserve rate hikes has cooled. The greenback spiked early in the pandemic, when global investors flocked to the security of assets denominated in U.S. currency. After peaking in April 2020, the greenback declined into 2021 but then rose again for much of 2022, driven by uncertainty surrounding the Russian invasion of Ukraine, soaring inflation, and higher global interest rates. By October, on a real trade-weighted basis, the dollar was 23% above the average valuation over the past 20 years. But inflation in the U.S. has consistently trended lower since peaking in the summer, and the Federal Reserve is now winding down its rate-hike campaign. Meanwhile, Middle East sovereign wealth funds have become less risk-averse and have been investing their windfall petro-dollars in other markets, such as China, India and South-East Asia. Looking ahead, we anticipate a trading range around current levels for the greenback over the balance of the year. That's because we think U.S. GDP growth may be uneven as a result of the Fed's rate hikes. In addition, we expect the higher rates to increase interest payments as a percent of GDP from recent lows of 1.5%, putting a modest strain on the U.S. balance sheet. Lastly, the still-elevated valuation of the greenback implies that other currencies -- and even gold or other commodities -- are possibly undervalued, and we expect investors such as the sovereign wealth funds to bid up those values at a measured pace over time.

Argus has published its latest Portfolio Selector, which features its popular Focus List. Each month, Director of Research Jim Kelleher, CFA, surveys the team of Argus Research industry analysts for their timeliest recommendations out of the company's fundamental universe of approximately 500 stocks. The Focus List typically includes 30 stocks: turnover is high, as Jim typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus Research.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are Cracker Barrel Old Country Sto (CBRL); DraftKings Inc. (DKNG); Intel Corp. (INTC); J.M. Smucker Co. (SJM) and the Focus List deletions are Restaurant Brands Intl In (QSR); Monster Beverage Corp. (MNST); Expedia Group Inc (EXPE); Fox Corporation (FOXA).

The major indices finished in positive territory on Thursday, led by the Technology and Communication Services sectors, but gave up stronger gains earlier in the day. Investors continued to focus on Fed policy, a day after the central bank raised its benchmark interest rate by 25 basis points and hinted that it could soon pause its rate hike campaign amid turbulence in the banking sector. On the housing front, new home sales rose to a seasonally adjusted annual rate of 640,000 in February, up 1.1% from January but below the consensus forecast of 650,000. Employment data continued to show a tight labor market; first-time claims for state unemployment benefits fell by 1,000 to a seasonally adjusted 191,000 for the week ended March 18, below the consensus forecast of 197,000. The Dow rose 0.23%, the S&P 0.30%, and the Nasdaq 1.01%. Crude oil traded near $69 per barrel, while gold jumped $49 to $1998 per ounce.

Stocks fell sharply on Thursday as stronger-than-expected labor market data pointed to continued tight monetary policy from the Federal Reserve. Payroll provider ADP said that U.S. companies added 235,000 jobs in December, up from 182,000 a month earlier and well above the Bloomberg consensus forecast of 150,000. Meanwhile, the Labor Department said that first-time claims for state unemployment benefits fell by 19,000 to 204,000 for the week ended December 31, below the consensus of 225,000. The data came ahead of the government's December employment report on Friday morning. The consensus calls for the addition of 200,000 new payroll jobs, down from 263,000 in November. The Dow fell 1.02%, the S&P 1.16%, and the Nasdaq 1.47%. Crude oil traded near $74 per barrel, while gold fell to $1838 per ounce.

Stocks were mostly lower Thursday morning following further hawkish remarks from Fed officials. Weekly jobless claims were higher than expected at 219,000 claims following the prior week's downwardly revised reading of 190,000 claims. The Dow fell 0.3%, the S&P 0.2%, while the Nasdaq was up 0.1%. Crude oil traded above $88 per barrel, while gold fell $1 to $1719 per ounce.

Monday Tee-Up: GDP Plus Inflation

Trimming GDP Estimates for 2022 & 2023

The stock market moved sideways last week before a sharp selloff on Friday put stocks firmly in the red. Blue chips relatively outperformed tech stocks,

Stocks rose strongly on Wednesday morning as investors awaited the Federal Reserve's policy statement, which should provide more details about its timeline for tapering bond purchases. Housing market data was weak. The National Association of Realtors said that U.S. sales of existing homes fell 2.0% to an annualized rate of 5.88 million units in August, slightly below the Reuters consensus forecast. On the earnings front, FedEx shares fell more than 8% after the company, hurt by higher costs, posted lower-than-expected fiscal 1Q earnings and trimmed its full-year guidance. The Dow rose 1.0%, the S&P 0.8%, and the Nasdaq 0.7%. Crude oil traded near $72 per barrel, while gold fell $4 to $1774 per ounce.

Stocks finished mostly higher on Thursday, but gave up most of their early gains in afternoon trading. On the employment front, first-time jobless claims fell to a new pandemic era low of 406,000, down from the prior week and below consensus. Continuing claims also fell to 3.642 million, down from 3.738 million a week earlier and below the consensus forecast of 3.68 million. Housing data disappointed. The National Association of Realtors said that its pending home sales index fell 4.4% in April to 106.2. The reading reflected the low inventory of homes available for sale and came in below the Reuters consensus forecast, which called for growth of 0.8%. The Dow rose 0.41%, the S&P rose 0.12%, and the Nasdaq fell 0.01%. Crude oil fell nearly 1% to $67 per barrel, while gold fell $3 to $1901 per ounce.

Stocks fell sharply on Thursday for a second day, though they pared some of their losses late in the session. Fed Chair Jerome Powell, speaking at a Wall Street Journal conference, appeared to trigger the selloff by suggesting that 10-year Treasury yields could rise further, as they have in recent weeks. On the employment front, first-time unemployment benefit claims rose by 9,000 to 745,000, but came in below the consensus estimate, while continuing claims fell to 4.295 million, also slightly below consensus. The data came ahead of the government's February employment report on Friday morning. The Reuters consensus calls for the addition of 182,000 new payroll jobs, up from 49,000 in January. The Dow fell 1.11%, the S&P 1.34%, and the Nasdaq 2.11%. Crude oil rose more than 4% to $64 per barrel, while gold dropped $19 to $1697 per ounce.

The stock market rallied last week, as a very strong November was followed by a positive start to December. On Friday, the Dow Jones Industrial Average rose 249 points, or 0.83%. The S&P 500 rose 32 points, or 0.88%, and the Nasdaq Composite was up 87 points or 0.70%. Last week, the Dow was up 1.0% and the S&P 500 was up 1.7%, closing at another all-time high. The Nasdaq was up 258 points or 2.1% for the week. For the year-to-date, the DJIA has now advanced 5.9%. The S&P is up 14.5%, and the Nasdaq continues to pull away from blue chips with a gain of 38.9%. Over the past 52 weeks, the Dow is up 7.9%, the S&P 500 is up 17.6%, and the Nasdaq is up 44.0%.

The market has generally skidded lower over trading days spanning two weeks. Is this a healthy correction of an overbought market, or a sign of further market distress to come? We won't know right away -- but, so far, the stock market mainly has unwound much of its August run-up.

The market has generally skidded lower over trading days spanning two weeks. Is this a healthy correction of an overbought market, or a sign of further market distress to come? We won't know right away -- but, so far, the stock market mainly has unwound much of its August run-up.

Reopening, with Masks On: Our Monthly Survey of the Economy, Interest Rates, and Markets

Reopening, with Masks On: Our Monthly Survey of the Economy, Interest Rates, and Markets

U.S. stocks rebounded on Monday morning, recouping some of last week's losses amid expectations for new rate cuts from the Federal Reserve. Economic data was mixed. IHS Markit said that its manufacturing purchasing managers' index fell to 50.7 in February from 51.9 in January, reflecting coronavirus disruptions. On the positive side, the Commerce Department reported that U.S. construction spending rose 1.8% to a record $1.369 trillion in January, above the consensus forecast of 0.6% growth. The Dow rose 2.1%, the S&P 2.0%, and the Nasdaq 2.2%. Crude oil rose 4% to $46.50 per barrel, while gold jumped $28 to trade near $1595 per ounce.

U.S. stocks rebounded on Monday morning, recouping some of last week's losses amid expectations for new rate cuts from the Federal Reserve. Economic data was mixed. IHS Markit said that its manufacturing purchasing managers' index fell to 50.7 in February from 51.9 in January, reflecting coronavirus disruptions. On the positive side, the Commerce Department reported that U.S. construction spending rose 1.8% to a record $1.369 trillion in January, above the consensus forecast of 0.6% growth. The Dow rose 2.1%, the S&P 2.0%, and the Nasdaq 2.2%. Crude oil rose 4% to $46.50 per barrel, while gold jumped $28 to trade near $1595 per ounce.

The market has generally skidded lower over trading days spanning two weeks. Is this a healthy correction of an overbought market, or a sign of further market distress to come? We won't know right away -- but, so far, the stock market mainly has unwound much of its August run-up.

Reopening, with Masks On: Our Monthly Survey of the Economy, Interest Rates, and Markets

If you decided to take the month of November off and are now back in the saddle with the advent of December, you may well be wondering what you missed. To answer that question solely based on developments in the insider-sentiment barometers from Vickers Stock Research, we'll tell you that you missed...nothing much.

U.S. stocks rebounded on Monday morning, recouping some of last week's losses amid expectations for new rate cuts from the Federal Reserve. Economic data was mixed. IHS Markit said that its manufacturing purchasing managers' index fell to 50.7 in February from 51.9 in January, reflecting coronavirus disruptions. On the positive side, the Commerce Department reported that U.S. construction spending rose 1.8% to a record $1.369 trillion in January, above the consensus forecast of 0.6% growth. The Dow rose 2.1%, the S&P 2.0%, and the Nasdaq 2.2%. Crude oil rose 4% to $46.50 per barrel, while gold jumped $28 to trade near $1595 per ounce.

If you decided to take the month of November off and are now back in the saddle with the advent of December, you may well be wondering what you missed. To answer that question solely based on developments in the insider-sentiment barometers from Vickers Stock Research, we'll tell you that you missed...nothing much.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate market-beating returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the ongoing trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky. Large-caps outperformed small-caps in nine of the 16 years of our test period. Annual returns were negative four times for both indices, but the average decline for small-caps was 18% in down years versus an average 12% annual decline for large-caps in down years. The standard deviation for monthly returns was 5.29% for small-caps over the 15-year period, versus 3.89% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks.

Stocks gave up early gains late on Thursday, a day after the Fed's widely expected rate cut. Microsoft shares rose 2% after the company announced a $40 billion stock repurchase and a substantial dividend hike, while U.S. Steel fell 11% after management projected a wider-than-expected third-quarter loss. On the employment front, the Labor Department said that first-time claims for unemployment benefit insurance rose by 2,000 to a seasonally adjusted 208,000 for the week ended September 14, slightly below the Reuters consensus forecast of 213,000. The Dow fell 0.19%, the S&P was flat, and the Nasdaq rose 0.07%. Crude oil rose slightly to about $58 per barrel, while gold fell $10 to $1506 per ounce.

Stocks gave up early gains late on Thursday, a day after the Fed's widely expected rate cut. Microsoft shares rose 2% after the company announced a $40 billion stock repurchase and a substantial dividend hike, while U.S. Steel fell 11% after management projected a wider-than-expected third-quarter loss. On the employment front, the Labor Department said that first-time claims for unemployment benefit insurance rose by 2,000 to a seasonally adjusted 208,000 for the week ended September 14, slightly below the Reuters consensus forecast of 213,000. The Dow fell 0.19%, the S&P was flat, and the Nasdaq rose 0.07%. Crude oil rose slightly to about $58 per barrel, while gold fell $10 to $1506 per ounce.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate market-beating returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the ongoing trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky. Large-caps outperformed small-caps in nine of the 16 years of our test period. Annual returns were negative four times for both indices, but the average decline for small-caps was 18% in down years versus an average 12% annual decline for large-caps in down years. The standard deviation for monthly returns was 5.29% for small-caps over the 15-year period, versus 3.89% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks.

Insert a descriptor of your choosing: Investors have [been whipsawed] [experienced whiplash] [taken a roller-coaster ride] [witnessed a remarkable tug of war] [seen share prices move from pillar to post] [navigated remarkable volatility] [endured seesaw action] as daily pronouncements, most of which relate to trade and interest rates, have pulled stocks price higher and lower with remarkable speed. But in all that action, corporate insiders have been predictable and, dare we say, effective investors.

Insert a descriptor of your choosing: Investors have [been whipsawed] [experienced whiplash] [taken a roller-coaster ride] [witnessed a remarkable tug of war] [seen share prices move from pillar to post] [navigated remarkable volatility] [endured seesaw action] as daily pronouncements, most of which relate to trade and interest rates, have pulled stocks price higher and lower with remarkable speed. But in all that action, corporate insiders have been predictable and, dare we say, effective investors.

Stocks edged higher on Wednesday morning following new employment and service sector data. Payroll provider ADP said that U.S. companies added just 27,000 jobs in May, down sharply from a revised 271,000 in April and below the Reuters consensus forecast of 180,000. Meanwhile, the Institute for Supply Management said that its nonmanufacturing index rose 1.4 points to 56.9 in May, above the consensus forecast. The Dow rose 0.3%, the S&P 0.2%, and the Nasdaq was flat. Crude oil fell $2 to about $51.50 per barrel, while gold rose $8 to $1337 per ounce.

Stocks edged higher on Wednesday morning following new employment and service sector data. Payroll provider ADP said that U.S. companies added just 27,000 jobs in May, down sharply from a revised 271,000 in April and below the Reuters consensus forecast of 180,000. Meanwhile, the Institute for Supply Management said that its nonmanufacturing index rose 1.4 points to 56.9 in May, above the consensus forecast. The Dow rose 0.3%, the S&P 0.2%, and the Nasdaq was flat. Crude oil fell $2 to about $51.50 per barrel, while gold rose $8 to $1337 per ounce.

The stock market continued its strong trend last week, marking nine straight weekly gains for the DJIA and the Nasdaq, though just four for the benchmark S&P 500. The unbroken uptrend is starting to make contrarians a bit nervous. Gains, however, are broad-based, showing none of the thinness or 'nifty fifty' flavor associated with frothy tops. On a sector basis, and using iShares Dow Jones U.S. ETFs, every sector is positive for the quarter (and thus for the year) to date. Only two sectors, Staples and Utilities, are up in only single-digits year to date (although the KHC fiasco could weigh on Consumer Staples in coming sessions).

The stock market continued its strong trend last week, marking nine straight weekly gains for the DJIA and the Nasdaq, though just four for the benchmark S&P 500. The unbroken uptrend is starting to make contrarians a bit nervous. Gains, however, are broad-based, showing none of the thinness or 'nifty fifty' flavor associated with frothy tops. On a sector basis, and using iShares Dow Jones U.S. ETFs, every sector is positive for the quarter (and thus for the year) to date. Only two sectors, Staples and Utilities, are up in only single-digits year to date (although the KHC fiasco could weigh on Consumer Staples in coming sessions).

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky.

Mid-cap stocks have sprinted out of the starting gate in 2019, gaining 11% year to date compared to the S&P 500's increase of 8%. Although large-caps have outperformed over the past 12 months, small- and mid-caps may be in a better position to generate returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the brewing trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 300%, compared to an advance of 217% for the S&P 500. This week's list includes stocks with market caps below $10 million that are on the Argus BUY list and are included in our Mid-Cap Model Portfolio.

Mid-cap stocks have sprinted out of the starting gate in 2019, gaining 11% year to date compared to the S&P 500's increase of 8%. Although large-caps have outperformed over the past 12 months, small- and mid-caps may be in a better position to generate returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the brewing trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 300%, compared to an advance of 217% for the S&P 500. This week's list includes stocks with market caps below $10 million that are on the Argus BUY list and are included in our Mid-Cap Model Portfolio.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky.

Stocks gave up early gains late on Thursday, a day after the Fed's widely expected rate cut. Microsoft shares rose 2% after the company announced a $40 billion stock repurchase and a substantial dividend hike, while U.S. Steel fell 11% after management projected a wider-than-expected third-quarter loss. On the employment front, the Labor Department said that first-time claims for unemployment benefit insurance rose by 2,000 to a seasonally adjusted 208,000 for the week ended September 14, slightly below the Reuters consensus forecast of 213,000. The Dow fell 0.19%, the S&P was flat, and the Nasdaq rose 0.07%. Crude oil rose slightly to about $58 per barrel, while gold fell $10 to $1506 per ounce.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate market-beating returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the ongoing trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky. Large-caps outperformed small-caps in nine of the 16 years of our test period. Annual returns were negative four times for both indices, but the average decline for small-caps was 18% in down years versus an average 12% annual decline for large-caps in down years. The standard deviation for monthly returns was 5.29% for small-caps over the 15-year period, versus 3.89% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks.

Insert a descriptor of your choosing: Investors have [been whipsawed] [experienced whiplash] [taken a roller-coaster ride] [witnessed a remarkable tug of war] [seen share prices move from pillar to post] [navigated remarkable volatility] [endured seesaw action] as daily pronouncements, most of which relate to trade and interest rates, have pulled stocks price higher and lower with remarkable speed. But in all that action, corporate insiders have been predictable and, dare we say, effective investors.

Stocks edged higher on Wednesday morning following new employment and service sector data. Payroll provider ADP said that U.S. companies added just 27,000 jobs in May, down sharply from a revised 271,000 in April and below the Reuters consensus forecast of 180,000. Meanwhile, the Institute for Supply Management said that its nonmanufacturing index rose 1.4 points to 56.9 in May, above the consensus forecast. The Dow rose 0.3%, the S&P 0.2%, and the Nasdaq was flat. Crude oil fell $2 to about $51.50 per barrel, while gold rose $8 to $1337 per ounce.

In theory, the stock market efficiently allocates the nation's capital to generate solid investment returns. Theory typically turns into reality in December, which since 1980 has the highest batting average -- or winning percentage of positive performances -- of any month. Stocks rise in December 74% of the time, compared to an average of 64% for all other months. The other top months for stocks are April (72%) and November (72%, including a 1.8% increase in 2018). On average in December, stocks have risen 1.5%. The best Decembers have been 1991 (+11.2%), 1987 (+7.3%), 2010 (+6.5%), 1999 (+5.8%) and 1998 (+5.6%). There have been clunkers: 1980 (-3.4%), 1981 (-3.0%) and 1986 (-2.8%). The month usually starts fast, as nonfarm payrolls are reported and IPOs are launched before the holidays. The Fed will be meeting in the middle of the month and is expected to raise interest rates. Despite the prospect for higher rates, bullish market fundamentals appear intact: the economy is growing, corporate profits are expanding and interest rates remain low on an historical basis. We look for December to build on the November gains, and Monday futures are pointing to a good start.

In theory, the stock market efficiently allocates the nation's capital to generate solid investment returns. Theory typically turns into reality in December, which since 1980 has the highest batting average -- or winning percentage of positive performances -- of any month. Stocks rise in December 74% of the time, compared to an average of 64% for all other months. The other top months for stocks are April (72%) and November (72%, including a 1.8% increase in 2018). On average in December, stocks have risen 1.5%. The best Decembers have been 1991 (+11.2%), 1987 (+7.3%), 2010 (+6.5%), 1999 (+5.8%) and 1998 (+5.6%). There have been clunkers: 1980 (-3.4%), 1981 (-3.0%) and 1986 (-2.8%). The month usually starts fast, as nonfarm payrolls are reported and IPOs are launched before the holidays. The Fed will be meeting in the middle of the month and is expected to raise interest rates. Despite the prospect for higher rates, bullish market fundamentals appear intact: the economy is growing, corporate profits are expanding and interest rates remain low on an historical basis. We look for December to build on the November gains, and Monday futures are pointing to a good start.

In theory, the stock market efficiently allocates the nation's capital to generate solid investment returns. Theory typically turns into reality in December, which since 1980 has the highest batting average -- or winning percentage of positive performances -- of any month. Stocks rise in December 74% of the time, compared to an average of 64% for all other months. The other top months for stocks are April (72%) and November (72%, including a 1.8% increase in 2018). On average in December, stocks have risen 1.5%. The best Decembers have been 1991 (+11.2%), 1987 (+7.3%), 2010 (+6.5%), 1999 (+5.8%) and 1998 (+5.6%). There have been clunkers: 1980 (-3.4%), 1981 (-3.0%) and 1986 (-2.8%). The month usually starts fast, as nonfarm payrolls are reported and IPOs are launched before the holidays. The Fed will be meeting in the middle of the month and is expected to raise interest rates. Despite the prospect for higher rates, bullish market fundamentals appear intact: the economy is growing, corporate profits are expanding and interest rates remain low on an historical basis. We look for December to build on the November gains, and Monday futures are pointing to a good start.

The stock market continued its strong trend last week, marking nine straight weekly gains for the DJIA and the Nasdaq, though just four for the benchmark S&P 500. The unbroken uptrend is starting to make contrarians a bit nervous. Gains, however, are broad-based, showing none of the thinness or 'nifty fifty' flavor associated with frothy tops. On a sector basis, and using iShares Dow Jones U.S. ETFs, every sector is positive for the quarter (and thus for the year) to date. Only two sectors, Staples and Utilities, are up in only single-digits year to date (although the KHC fiasco could weigh on Consumer Staples in coming sessions).

Hoping and Positioning for a December Rally

Hoping and Positioning for a December Rally

Be careful what you wish for. As we described a week ago, the S&P 500 put in a double bottom on Friday 11/23/18, with the index closing at 2,633. That is few points below the bottom put in at 2,641 on 10/29/18. Frequently, the second leg of a double bottom marks the point at which investors capitulate and gloom is palpable. Yet soon after, stocks begin a recovery run, usually to new highs. Recent double bottoms include August and September '11; January and February '16; and, most recently, February and March '18. More-substantial double lows marking the end of bear markets occurred in October '02 and March '03, and in November '08 and March '09. Now the double bottom has been put in, but investors confront the same problems that originally tanked stocks. The Fed's resolute rate-hiking implies that the era of QE and easy Fed liquidity is truly over. Oil prices are collapsing on fears of weak demand. Housing is sending mixed signals, as sales and starts are okay but builder sentiment and mortgage activity are tumbling. One healthy sign is that investors are not abandoning stocks; they are fiercely rotating away from former leaders but just as fiercely buying defensive names. In the fourth quarter to date, former leaders including Technology, Discretionary and Industrial are down in double digits, while Utilities and Staples are positive. For all the sound and fury, including two corrections in one year, the S&P 500 is down less than 2% year to date; with dividends, it is hovering near break-even. Stocks could still pull out a win this year, but chances for a big win have faded dramatically.

Be careful what you wish for. As we described a week ago, the S&P 500 put in a double bottom on Friday 11/23/18, with the index closing at 2,633. That is few points below the bottom put in at 2,641 on 10/29/18. Frequently, the second leg of a double bottom marks the point at which investors capitulate and gloom is palpable. Yet soon after, stocks begin a recovery run, usually to new highs. Recent double bottoms include August and September '11; January and February '16; and, most recently, February and March '18. More-substantial double lows marking the end of bear markets occurred in October '02 and March '03, and in November '08 and March '09. Now the double bottom has been put in, but investors confront the same problems that originally tanked stocks. The Fed's resolute rate-hiking implies that the era of QE and easy Fed liquidity is truly over. Oil prices are collapsing on fears of weak demand. Housing is sending mixed signals, as sales and starts are okay but builder sentiment and mortgage activity are tumbling. One healthy sign is that investors are not abandoning stocks; they are fiercely rotating away from former leaders but just as fiercely buying defensive names. In the fourth quarter to date, former leaders including Technology, Discretionary and Industrial are down in double digits, while Utilities and Staples are positive. For all the sound and fury, including two corrections in one year, the S&P 500 is down less than 2% year to date; with dividends, it is hovering near break-even. Stocks could still pull out a win this year, but chances for a big win have faded dramatically.

If you decided to take the month of November off and are now back in the saddle with the advent of December, you may well be wondering what you missed. To answer that question solely based on developments in the insider-sentiment barometers from Vickers Stock Research, we'll tell you that you missed...nothing much.

In theory, the stock market efficiently allocates the nation's capital to generate solid investment returns. Theory typically turns into reality in December, which since 1980 has the highest batting average -- or winning percentage of positive performances -- of any month. Stocks rise in December 74% of the time, compared to an average of 64% for all other months. The other top months for stocks are April (72%) and November (72%, including a 1.8% increase in 2018). On average in December, stocks have risen 1.5%. The best Decembers have been 1991 (+11.2%), 1987 (+7.3%), 2010 (+6.5%), 1999 (+5.8%) and 1998 (+5.6%). There have been clunkers: 1980 (-3.4%), 1981 (-3.0%) and 1986 (-2.8%). The month usually starts fast, as nonfarm payrolls are reported and IPOs are launched before the holidays. The Fed will be meeting in the middle of the month and is expected to raise interest rates. Despite the prospect for higher rates, bullish market fundamentals appear intact: the economy is growing, corporate profits are expanding and interest rates remain low on an historical basis. We look for December to build on the November gains, and Monday futures are pointing to a good start.

Hoping and Positioning for a December Rally