Returns can get a bit dicey for the stock market from February into mid-March, especially in a presidential election year. Yet Monday saw a massive reversal in relative strength, one that could be described as "Revenge of the Small Caps." That also can be said about the past three trading days. The Russell 2000 (IWM) rose 1.8% on Monday and has popped 5% in the past three days. The iShares Micro-Cap ETF (EWC) gained 2.8% yesterday and has surged over 6% in the past three days. The IWM is quickly approaching a key technical level at 205, which was the recent high in late December as well as the key breakdown level from January 2022.

U.S. equities inched higher on Thursday despite regional bank woes and ahead of the CPI revisions that will be released this morning. After hitting 5000 for the first time ever, the S&P 500 closed just below 5000. The Dow also closed at an all-time high. Big stock gainers include Arm Holdings PLC (ARM), up 48% and Ralph Lauren Corp. (RL), up 25%. The S&P 500 closed up less than 0.1%, the Dow was up 0.1% and the Nasdaq gained 0.2%. Crude oil rose above $76 per barrel and gold was up $1 to $2049 per ounce.

Rapidly rising inflation in 2022 knocked stocks into a bear market. While growth strategies suffered the most, value strategies also declined. Even bond prices were lower last year. Stocks have recovered thus far in 2023, but gains have been largely driven by only a handful of high-tech companies. Inflation remains high and the Fed continues to raise rates. Is a recession in the offing? With all the uncertainty, is it time for investors to cash in their chips? We note that investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes, such as fixed income and cash. Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate. Academic literature and, more to the point, returns history, indicate that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

After a rough 2022, 2023 was a pleasant event, with all the indices posting gains and seven out of 11 S&P 500 (SPX) sectors posting nice to extraordinary gains. At the end of 2022, about 50% of SPX holdings were above their 50- and 200-day averages. At the end of 2023, 90% were over their 50-day and 78% were above their 200-day. The Nasdaq 100 (QQQ) finished 2023 with 93% of issues above their 50-day and 85% over the 200-day, versus 40% and 43%, respectively, in 2022.

Since the end of October, when market sentiment was pretty bearish based on the size of pullbacks and/or corrections in the major indices, there has been (little surprise) a rather large increase in bullish sentiment. This includes indicators that track where money is exchanged (important) as well as sentiment polls (just opinions).

Equities have sent confusing and contradictory signals throughout a back-and-forth 2023. Since setting year-highs at the end of July, the S&P 500 has mainly moved lower. During various attempted recovery spurts, the one thing that has been consistently lacking has been breadth. A handful of AI superhero stocks cannot carry the market, and narrow recovery tries are doomed to fail, in our view.

Breadth in the stock market remains our main concern, with the cumulative NYSE New 52-week Highs-NYSE New 52-week Lows still below its 50-day moving average. In addition, the percentage of stocks on the S&P 500 (SPX) and on the S&P 100 (OEX) above their 200-day moving averages remains weak at just 40% -- and in the dangerous territory that exists below 45%. The NYSE Composite is a bit worse at 38%.

Dimming Optimism on Possible Rate Cuts

Rapidly rising inflation in 2022 knocked stocks into a bear market. While growth strategies suffered the most, value strategies also declined. Even bond prices were lower last year. Stocks have recovered thus far in 2023, but gains have been largely driven by only a handful of high-tech companies. Inflation remains high and the Fed continues to raise rates. Is a recession in the offing? With all the uncertainty, is it time for investors to cash in their chips? We note that investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes, such as fixed income and cash. Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate. Academic literature and, more to the point, returns history, indicate that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

Stocks were mixed on Monday morning as investors weighed the takeover of failing First Republic Bank by JPMorgan. JPM shares rose nearly 3% on news of the acquisition. Investors also awaited the Fed's interest rate decision and economic commentary later this week. A 25-basis-point rate hike is widely expected. The Dow rose 0.2%, the S&P rose 0.1%, and the Nasdaq fell 0.2%. Crude oil fell to $75.50 per barrel while gold fell $8 to $1992 per ounce.

Monday Tee Up: CPI and Earnings Season

The current volume of insider transactions remains the primary issue when considering current insider sentiment. As is always the case when earnings season in full swing, insiders are broadly prohibited from trading and, as such, there are few transactions and therefore few meaningful signals about insider sentiment. But even with less sentiment inputs, the weekly data from Vickers Stock Research does reflect trends -- and current trends ring no alarms.

Rapidly rising inflation 2022 knocked stocks into a bear market. While growth strategies suffered the most, value strategies also declined. Even bond prices were lower last year. Volatility, which has dropped from the highs of 2020, still has not returned to pre-COVID levels. Is it time for investors to cash in their chips? We note that investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes, such as fixed income and cash. As well, those fixed-income returns are from eras when the 10-year Treasury bond yield was much higher than the current 3.5% level. So what's a potential equity strategy for investors amid all the uncertainty? Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate.

We anticipate that activity in the consumer sector, which was the primary driver of GDP growth in 2022, will slow as the Federal Reserve continues to raise interest rates and companies keep cutting jobs. The sector is all-important to the economy and accounts for about two-thirds of GDP. The main driver to the consumer sector is the jobs market. While the domestic employment environment is in better shape than it was two years ago, it is starting to show signs of deterioration. Though the unemployment rate is 3.5%, it seems headed inevitably higher in the wake of layoff announcements from high-profile companies such as Microsoft, Alphabet, Amazon.com, Salesforce.com, Goldman Sachs, and Morgan Stanley. Meanwhile, consumer balance sheets appear to be weakening somewhat after multiple quarters of spending growth. A combination of pandemic-related factors -- such as economic shutdowns and aggressive fiscal spending -- resulted in a sharp improvement in household finances in 2020. Indeed, the stimulus program initially lifted personal savings to almost $5 trillion. But that money has been spent, and then some: the personal savings level has come down to $625 billion, below the $1 trillion average level in the decade prior to the pandemic. With savings tapped, a slowdown in the all-important consumer sector seems likely in 1H23. Here are some of our top "cautious consumer" stocks for 2023.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider trading and institutional ownership trends. Form 13-Fs are due 45 days after the end of calendar quarters, and have now come in from 3Q22. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings (among others) in order to determine their core holdings and new purchases. Activist investing has evolved in recent years and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Here are some recent new purchases and key holdings of Activist investors, according to Vickers.

Stocks fell on Monday morning, reversing course after Friday's rally, as investors awaited the Fed's policy announcement and the October employment report later this week. In China, a COVID lockdown forced the closure of Shanghai Disneyland. Discontent with COVID restrictions also prompted workers to flee a Foxconn plant in China, disrupting the production of iPhones at the plant. The Dow fell 0.1%, the S&P 0.3%, and the Nasdaq 0.7%. Crude oil traded near $87 per barrel, while gold fell $4 to $1641 per ounce.

Stocks fell on Thursday 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 Labor department will release the September jobs report today. The Dow fell 1.2%, the S&P 1.0%, while the Nasdaq was down 0.7%. Crude oil traded above $88 per barrel, while gold fell $1 to $1719 per ounce.

The major indices turned on the afterburners in July following a difficult June. The S&P 500 soared 9%, regaining all its losses from June. The Nasdaq and the Nasdaq 100 both exploded over 12%, recapturing their June declines and then some. The S&P MidCap 400 and the Russell 2000 rocketed almost 11%. It was the largest 20-day rate-of-change (ROC) for the '500,' the '400,' and the '2000' since late 2020/early 2021. The Nasdaq and the QQQs saw a better 20-day ROC in early April, which, as we now know, was a bear-market rally.

Rapidly rising inflation in 2022 has knocked the stock market into a bear market. While growth strategies have suffered the most, value strategies also have declined. Even year-to-date bond prices are lower. Volatility, which has dropped from the highs of 2020, still has not returned to pre-COVID levels. Is it time for investors to cash in their chips? We note that investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes, such as fixed income and cash. As well, those returns are from eras when the 10-year Treasury bond yield was much higher than the current 3.0% level. So what's a potential equity strategy for investors amid all the uncertainty? Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate. Academic literature and, more to the point, returns history, indicate that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

Stocks plunged on Thursday morning amid mounting recession concerns, more than erasing yesterday's gains. The selloff came a day after the Federal Reserve raised its benchmark interest rate by 75 basis points, the first such increase since 1994, and lowered its full-year U.S. GDP growth forecast. The Dow fell 2.4%, the S&P 3.2%, and the Nasdaq 3.9%. Crude oil traded near $116 per barrel, while gold rose $28 to $1847 per ounce.

Markets have faced difficult times before, with challenging economic environments, wars, disease, banking and housing crises, and inflation much worse than we are seeing now, to name but a few. Of late, stock investors had it very good for a very long time -- but now, finding opportunities requires much more work. There is no secret sauce, but there are principals that are worth reviewing: 1) diversify; 2) look for strong management; 3) look for solid balance sheets; 4) do your homework; and 5) adapt. To assemble this week's list, we looked across several sectors that historically are considered to be the most-shielded from high inflation and high interest rates. We then cross-referenced our coverage universe for companies where our analysts recently raised target prices; that have an Argus Financial Strength rating of at least Medium-High; and that pay dividends of least 3%. Some companies also are featured in our model portfolios (Growth & Income, Equity Income, Growth, and Institutional). Here is our list of companies we believe to be recession-proof, all of which are rated BUY at Argus.

Stocks rose on Tuesday morning as investors weighed new earnings reports and looked ahead to the Fed's policy statement on Wednesday. Pfizer shares rose after the company reported stronger-than-expected first-quarter results, though it also projected below-consensus sales for the full year, including sales of COVID medication Paxlovid. On the employment front, the Labor Department said that U.S. job openings rose to a record 11.549 million in March, up from 11.344 million in February and above the consensus estimate of 11.2 million. The Dow rose 0.7%, the S&P 0.9%, and the Nasdaq 0.4%. Crude oil traded near $104 per barrel, while gold rose $9 to $1873 per ounce.

Stocks rose on Tuesday morning amid signs of progress in peace negotiations between Ukraine and Russia, with Russia reportedly offering to scale back military operations near Kyiv and elsewhere in northern Ukraine as a confidence-building measure. For its part, Ukraine has agreed to maintain neutral status but with appropriate international security guarantees. In the U.S., consumer confidence data was positive. The Conference Board said that its consumer confidence index rose to 107.2 in March, up from 105.7 in February and above the consensus forecast. The Dow rose 0.6%, the S&P 0.7%, and the Nasdaq 1.1%. Crude oil traded near $103 per barrel, while gold dropped $31 to $1909 per ounce.

Stocks fell on Thursday morning, ending several days of recovery after a weak earnings report from Facebook owner Meta Platforms. FB shares dropped 25% after the company reported lower-than-expected 4Q earnings and issued disappointing first-quarter guidance. Other Communication Services stocks also fell sharply, sending the sector down nearly 5%. The Dow fell 0.8%, the S&P 1.4%, and the Nasdaq 2.2%. Crude oil rose to $89 per barrel, while gold fell $3 to $1807 per ounce.

Stocks edged higher on Tuesday morning ahead of the Fed's policy announcement on Wednesday and the likely start of its tapering program. Investors also weighed a new round of earnings reports. Arista Networks jumped nearly 25% after the company posted strong 3Q results, announced a new stock buyback, and raised its 2022 sales guidance. The Dow rose 0.2%, the S&P 0.3%, and the Nasdaq 0.2%. Crude oil traded near $83 per barrel, while gold fell $4 to $1792 per ounce.

Stocks were mixed on Friday morning following a better-than-expected July employment report. The Labor Department said that the U.S. added 943,000 payroll jobs in July, up from a revised 938,000 in June and above the Bloomberg consensus forecast of 865,000. The reading was the strongest since August 2020. The official unemployment rate fell to 5.4%, down from 5.9% in June and below the consensus of 5.7%. The Dow rose 0.4%, the S&P rose 0.2%, and the Nasdaq fell 0.2%. Crude oil traded near $69 per barrel, while gold fell $44 to $1765 per ounce.

The onset of the coronavirus in 2020 knocked the stock market into a bear market. Though stocks have recovered, the U.S. economy is about to slow down and COVID-19 cases are rising again as virus variants spread. Volatility, which has dropped from the highs of 2020, still has not returned to pre-COVID levels. Daily prices can swing wildly, as they did during two consecutive days in mid-July when the Dow Jones Industrial Average plummeted more than 1,000 points. Yet investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes. Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate and can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

The latest run-up in West Texas Intermediate (WTI) has reached our target in the high $70s/barrel, as WTI hit an intraday high of $77 on Tuesday. This was followed by a sharp reversal, with WTI closing at $73.37. On Wednesday, oil fell to $72. The level reached this week matches the prior high from October 2018. Gasoline futures hit $2.33/gallon on Tuesday, reversed, and closed at $2.20 on Wednesday. Maybe the summer driving season won't be that bad after all.

Stocks were mixed on Wednesday morning amid new employment and housing market data. Payroll provider ADP said that U.S. companies added 692,000 payroll jobs in June, down from a revised 886,000 in May but above the Reuters consensus forecast of 600,000. On the housing front, the National Association of Realtors said that its pending home sales index rose to 114.7 in May, up 8.0% from April and well above the consensus forecast calling for a decline of 0.8%. The Dow rose 0.4%, the S&P rose 0.1%, and the Nasdaq fell 0.1%. Crude oil traded near $73.50 per barrel, while gold rose $4 to $1768 per ounce.

Late last week, we said that the major indices could see another leg lower due to negative price action, before moving higher again. We also said that there were some positive developments from market sentiment, which suggested that maybe the pullback low was in. In other words, the market was at a crossroads. But price action generally wins.

Stocks were mixed on Monday morning amid a new round of first-quarter earnings reports and weaker-than-expected manufacturing and construction data. The Institute for Supply Management said that its factory index fell to 60.7 in April, down from 64.7 in March and below the Reuters consensus forecast of 65.0. Meanwhile, the Commerce Department said that U.S. construction spending rose 0.2% in March, up from a 0.6% decline in February but well below the consensus forecast calling for 1.9% growth. The Dow rose 0.9%, the S&P rose 0.3%, and the Nasdaq fell 0.5%. Crude oil traded near $64.50 per barrel, while gold jumped $27 to $1795 per ounce.

We have skirted the issue of sentiment for months as bullish extremes have become even more extreme. Other than some mild pullbacks, we haven't seen anything close to real fear in the stock market since the COVID-19 collapse in early 2020.

Even with indices bobbing around all-time highs, the stock market continues to meander and has not gotten much done of late. That said, successful rotation has kept breadth strong. Most stocks are trading above their long-term support. In the near-term, though, the market is showing some wear and tear.

Stocks rose strongly on Monday morning amid a jump in silver prices that boosted mining stocks and mixed economic data. The Institute for Supply Management said that its national manufacturing index fell to 58.7 in January, down from 60.5 in December and below the Reuters consensus forecast of 60.0. Meanwhile, the Commerce Department reported that U.S. construction spending rose 1.0% to an annualized $1.49 trillion in December, above the consensus forecast and the highest level since the start of the series in 2002. The Dow rose 0.9%, the S&P 1.5%, and the Nasdaq 2.1%. Crude oil traded near $53 per barrel, while gold rose $15 to $1866 per ounce.

Stocks were mixed on Tuesday morning as investors awaited results from the Georgia Senate runoff elections, which could give Democrats control of the chamber. On the economic front, the Institute for Supply Management said that its U.S. manufacturing index rose to 60.7 in December, up from 57.5 in November and above the Reuters consensus forecast of 56.6. The Dow fell 0.3%, the S&P fell 0.1%, and the Nasdaq rose 0.3%. Crude oil traded near $50 per barrel, while gold rose $1 to $1948 per ounce.

Stocks rose on Monday morning, recovering some of last week's losses as investors awaited Election Day on Tuesday. The Commerce Department said that U.S. construction spending rose 0.3% in September, down from a revised 0.8% gain in August and below the Reuters consensus forecast of 1.0% growth. However, manufacturing data was strong. The Institute for Supply Management said that its national factory index rose to 59.3 in October, up from 55.4 in September and above the consensus forecast of 55.8. The Dow rose 1.5%, the S&P 1.2%, and the Nasdaq 0.4%. Crude oil traded near $36 per barrel, while gold rose $16 to $1896 per ounce.