The trading week that ended March 22 featured (yet again) all-time highs, with the weekly winning streak for the S&P 500 (SPX) continuing. The SPX has moved higher in 17 out of 21 weeks, with a 27% gain during that period. The Nasdaq 100 (QQQ) and the Nasdaq are also 17 out of 21, soaring 30%. The S&P 400 prints the same story, with a 29% pop. Index price volatility is almost undetectable, although there has been some decent volatility, both up and down, among individual stocks. We saw one day of strong breadth on Wednesday of that week and one weak day on Friday.

Insiders continue to pursue a reverse version of capitulation, refusing to acquire stocks because many others have done exactly that. Indeed, while asset managers who shunned stocks in 2023 are scrambling at year-end to infuse their portfolios with winners, insiders, who called market pivots convincingly all year, have taken to the sidelines during the year-end rally. Importantly, though, the lack of interest from executives, directors, and beneficial owners still has not moved beyond the 'ho hum' phase. So while the short-term (one-week) insider-sentiment indicators from Vickers Stock Research are bearish for a third week, the degree of bearishness is nowhere near the levels needed to drag the broader (eight-week) sentiment indicators to readings that cause concern. Current insider sentiment suggests that stocks may be a tad 'over their skis,' but are not likely to crash on landing.

Insiders continue to pursue a reverse version of capitulation, refusing to acquire stocks because many others have done exactly that. Indeed, while asset managers who shunned stocks in 2023 are scrambling at year-end to infuse their portfolios with winners, insiders, who called market pivots convincingly all year, have taken to the sidelines during the year-end rally. Importantly, though, the lack of interest from executives, directors, and beneficial owners still has not moved beyond the 'ho hum' phase. So while the short-term (one-week) insider-sentiment indicators from Vickers Stock Research are bearish for a third week, the degree of bearishness is nowhere near the levels needed to drag the broader (eight-week) sentiment indicators to readings that cause concern. Current insider sentiment suggests that stocks may be a tad 'over their skis,' but are not likely to crash on landing.

Proper leadership for the stock market is one of the most important indicators of the health of a bull market. This takes on even more importance because the major indices are cap-weighted, with some industries and sectors heavily weighted in the indices and others not at all. In addition, the psyche of a bull market reflects which stocks are leading. Are they higher-beta names with strong growth revenues and EPS prospects that can add some real alpha to a portfolio? Or are they lower-beta names, where slow and steady is the name of the game.

Stocks fell on Friday morning amid renewed interest rate and recession concerns following two days of Capitol Hill testimony from Fed Chair Jerome Powell. U.S. business activity data was mixed. S&P Global reported that its flash services sector PMI fell to 54.1 in June from 54.9 in May. The reading above 50 indicated continued expansion and was slightly above the Reuters consensus forecast of 54.0. However, the manufacturing PMI fell to 46.3 from 48.4 in May and missed the consensus forecast of 48.5. On the earnings front, used car retailer CarMax rose 9% after better-than-expected fiscal first-quarter results. The Dow fell 0.5%, the S&P 0.6%, and the Nasdaq 0.9%. Crude oil traded near $68 per barrel, while gold rose $15 to $1939 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.

Economy Chugging but Possibly Slowing as Earnings Season Approaches

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 Raytheon Teches Corporatio (RTX); Biogen Inc (BIIB); Coca-Cola Co (KO); Shopify Inc (SHOP) and the Focus List deletions are Hormel Foods Corp. (HRL); General Dynamics Corp. (GD); AbbVie Inc (ABBV); NXP Semiconductors NV (NXPI).

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.

In the 40-plus years since Ronald Reagan became president, stocks have turned in a positive performance almost 80% of the time. The average annual gain has been 13%. But 2022 was a clunker, as the S&P 500 entered a bear market and fell nearly 20% for the year. Volatility has now had an important presence in the market six years in a row: the last "normal" year for stocks was 2016, when the market climbed 12%. For 2023, we see a market that is more likely to generate normal returns compared to the past three or four years, even if volatility remains high. The start of the year may be difficult, as the Fed further raises rates, the economy flirts with recession, and the Russian invasion of Ukraine continues. Earnings growth may be minimal in the first half, as margins are high and the consumer-led economy stalls a bit. At the same time, the Fed should gradually move to the sidelines and interest rates at the long and short end of the curve are unlikely to climb as far and as fast as in 2022. This will help equity valuations, which already have come back from nosebleed levels. Indeed, the bond market often leads the Fed, and investors may be pushing long-term rates lower in 2023. Likewise, stocks historically have led the economy out of recession, typically bottoming during the middle of the pullback. Given low unemployment, we don't think an economic recession in 2023 will be particularly long or deep, allowing for an earnings recovery in 2H23. In addition, the third year of the presidential cycle is historically strong, as the party in power increases spending to help generate electoral momentum. The S&P 500 has posted 13 down years out of the past 60. The years following the down years are up 77% of the time, and the average increase is 13%. Our formal price target for the S&P 500 in 2023 is now 4300.

To have been bearish in 2022 certainly would have served one well. Corporate insiders normally sell shares more often than they buy shares, and did that pretty much all year - with notable buying jags that aligned with market lows. The buying resulted in nice-but-brief outperformance, which is a good thing. But insiders never sold at levels that suggested broad-based concern. With the year-to-date data as of this writing showing the DJIA down 9%, the S&P 500 off 19%, and the Nasdaq lower by 33%, we can't fault those who say insiders missed the mark in 2022.

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.

Pressure on Earnings Adds to Market Risk

Runaway inflation (at a 70% rate) has sent Turkish 10-year bond rates soaring above 12%. A relatively high inflation rate (10%) also is propping up 10-year bond rates in Brazil at 12%. But interest rates around the rest of the world generally are much lower (as they are in Europe, the U.S., and the U.K.) or are even flat (such as in Japan). In the U.S., the Fed is in the middle rounds of its fight against inflation, and looks to be battling for the next 2-3 quarters. The Bank of England also is in an aggressive campaign to bring prices down, while the ECB may be poised to reduce the scale of its interest-rate increases. We look for U.S. interest rates to head modestly higher over the year, but then likely touch an inflection point (10-year yield of approximately 4.0%) and move lower as unemployment rises and the economy is near recession. Our advice to fixed-income investors seeking current yield is to focus on short to intermediate (two-year to seven-year) U.S. Treasuries and floating-rate securities. We recommend paring back a position in inflation-protected securities due to the expectations that inflation rates may have peaked. We also would add shorter-duration investment-grade securities or ETFs. We believe the risk of higher long-term rates (duration risk) outweighs the low coupon rates and that short-term rates have made their move in the current environment. We would avoid foreign-government fixed-income securities given their relatively low yields, sovereign risks, and repatriation issues.

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.

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 AstraZeneca PLC (AZN); Restaurant Brands Intl In (QSR); Hormel Foods Corp. (HRL); Huntington Bancshares, Inc. (HBAN) and the Focus List deletions are Apollo Global Management Inc (APO); Vertex Pharmaceuticals, Inc. (VRTX); Procter & Gamble Co. (PG); Marriott International, Inc. (MAR).

Stocks bounced back from earlier losses. The Dow ended up, driven by positive news from Johnson & Johnson and Amgen. NVIDIA Corporation (NVDA) is down more than 7% after the U.S. imposed a new license in order to do business in China and Russia, forcing the company to halt shipments to China. Other tech stocks fell as well. The Dow rose 0.5%, the S&P 0.3%, while the Nasdaq fell 1.2%. Crude oil fell 4% to $86 per barrel, while gold fell $17 to $1708 per ounce.

Stocks recovered from early losses on Thursday morning following new employment data and lower sales and earnings guidance from Microsoft, which cited the impact of the strong U.S. dollar. Microsoft shares fell 2%. Hewlett-Packard Enterprise also fell 6% after posting disappointing fiscal second-quarter earnings. The Dow fell 0.1%, the S&P rose 0.3%, and the Nasdaq rose 1.0%. Crude oil traded near $116 per barrel, while gold rose $23 to $1872 per ounce.

Stocks rose on Wednesday morning ahead of the release of the Federal Reserve's latest meeting minutes. With recession fears mounting, investors will be looking closely at the comments of Fed officials on inflation and the pace of interest rate hikes. Durable goods orders were weaker than expected. The Commerce Department said that orders for durable goods rose 0.4% in April, down from 0.6% in March and below the consensus estimate of 0.6% growth. Orders for core capital goods excluding aircraft rose 0.3%, down from 1.1% growth in March and also below consensus. The Dow rose 0.3%, the S&P 0.6%, and the Nasdaq 0.9%. Crude oil rose slightly to $110 per barrel, while gold fell $16 to $1849 per ounce.

Stocks have struggled this year, with the S&P 500 now down over 12% (excluding dividends) so far in 2022. But not every stock has tumbled. Our analysts have been working through earnings season and have come across several stocks in Argus coverage that have approached target prices. We set target prices through our valuation framework, which includes analysis of historical multiples, peer multiples, and future dividends and cash flows. After adjusting the models for the latest earnings and dividend information -- most of which has been good -- here are some of the stocks for which we have raised target prices over the past month. All of the following stocks are rated BUY at Argus.

Stocks were mixed on Thursday morning after giving up strong early gains. Tesla shares rose more than 6% after the carmaker posted better-than-expected 1Q sales and earnings, helped by price increases that more than offset the impact of higher costs. American Airlines shares also rose strongly after the company posted a narrower-than-expected 1Q loss and forecast a return to profitability in the second quarter. The Dow rose 0.3%, the S&P rose 0.2%, and the Nasdaq fell 0.1%. Crude oil rose more than 1% to $103.50 per barrel, while gold fell $14 to $1942 per ounce.

Stocks rose on Monday morning, led by the Communication Services and Technology sectors, as Western nations considered a new round of sanctions on Russia. Twitter shares rose more than 25% on news that Tesla CEO Elon Musk had taken a 9.2% stake in the company. On the negative side, Starbucks fell nearly 5% after the company suspended its stock buyback program. The Dow rose 0.2%, the S&P 0.6%, and the Nasdaq 1.6%. Crude oil rose to $102 per barrel, while gold traded near $1935 per ounce.

Stocks Struggle While the U.S. Economy Chugs Along

Stocks finished lower on Thursday amid the intensifying war in Ukraine, where Russian forces appeared to be encircling Kyiv and gaining control of key Black Sea ports. U.S. employment data was better than expected. The Labor Department said that first-time jobless claims fell to 215,000 for the week ended February 26, down from 233,000 a week earlier and below the Bloomberg consensus forecast of 225,000. The data came ahead of the government's February employment report on Friday morning. The consensus calls for the addition of 403,000 new payroll jobs after an increase of 467,000 in January, and a slight decrease in the unemployment rate to 3.9%. The Dow fell 0.29%, the S&P 0.53%, and the Nasdaq 1.56%. Crude oil traded near $108 per barrel, while gold rose $17 to $1940 per ounce.

Stocks gave up most of their early gains on Friday morning amid more signs of accelerating inflation. The Labor Department reported that U.S. consumer prices rose 6.8% year-over-year in November, up from 6.2% in October but in line with the consensus estimate. The core CPI, excluding food and energy costs, also rose 4.9% last month, up from 4.6% in October. On the earnings front, Oracle shares jumped 13% after the company reported better-than-expected fiscal 2Q earnings and issued strong guidance for the current quarter. The Dow rose 0.1%, the S&P 0.3%, and the Nasdaq 0.1%. Crude oil rose 1% to $71.50 per barrel, while gold rose $8 to $1784 per ounce.

Stocks gave up early gains on Friday morning amid continued concerns about the economic impact of the Delta variant. Producer price data again pointed to high inflation. The Labor Department said that U.S. producer prices rose 0.7% in August, above the Reuters consensus forecast of 0.6% but down from 1.0% in July. The PPI also rose 8.3% on a year-over-year basis, up from 7.8% in July and the largest increase since November 2010. The Dow fell 0.4%, the S&P fell 0.3%, and the Nasdaq was flat. Crude oil traded near $69.50 per barrel, while gold fell $3 to $1797 per ounce.

Stocks fell on Tuesday morning on weak economic data. The Commerce Department reported that retail sales fell 1.3% in May, compared to a revised increase of 0.9% in April. Producer prices rose 6.6% year-over-year in May and 0.8% month-over-month. The Dow fell 0.5%, the S&P fell 0.3%, and the Nasdaq 0.6%. Crude oil traded near $72 per barrel, while gold fell $9 to $1857 per ounce.

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.

The first day of trading in December reversed some of the selling on November's last day, returning major indices to levels at or near all-time highs. When indices are making new highs, it stands to reason that many stocks are also at or near all-time-high levels. Yet that's not an ironclad guarantee.

The onset of the coronavirus earlier this year knocked the stock market into a bear market. Though stocks have recovered, the U.S. economy is still in recession and COVID-19 cases are spiking as the weather turns colder and people head indoors. Volatility, which was low in early 2020 after a robust year for equities in 2019, has spiked higher, and has remained elevated. Is it time to cash in the 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 not sub-1.0%. 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 included in our Min Vol model portfolio and typically industry leaders and have received a high score from our A6 Quant Model on Financial Strength and a low score on Risk. Stocks in the portfolio include the following.

Runaway inflation (an 11.8% rate) has sent Turkish 10-year bond rates soaring toward 14%. A relatively high inflation rate of 5% is also propping up 10-year bond rates in India (at 6.2%). But interest rates around the rest of the world are near all-time lows, as they are in the U.S. and the U.K. Some are even outright negative, as in Japan, France, Germany and Switzerland. In the U.S., the Federal Reserve has taken numerous extraordinary steps to keep financial markets functioning, and we don't look for the Fed to raise short-term rates for at least the next 12-18 months. At the same time, for several reasons, we do not expect the Fed to follow its European peers and establish negative interest rates in the U.S. First, the jury is out as to whether negative rates are actually helping economies recover. Second, money-market funds in the U.S. play an important role in the financial markets, and negative government bond yields would "break the buck." Our advice to fixed-income investors seeking yield is to consider ETF specializing in securitized debt, corporate debt, and high-yield or floating bonds.

Runaway inflation (an 11.8% rate) has sent Turkish 10-year bond rates soaring toward 14%. A relatively high inflation rate of 5% is also propping up 10-year bond rates in India (at 6.2%). But interest rates around the rest of the world are near all-time lows, as they are in the U.S. and the U.K. Some are even outright negative, as in Japan, France, Germany and Switzerland. In the U.S., the Federal Reserve has taken numerous extraordinary steps to keep financial markets functioning, and we don't look for the Fed to raise short-term rates for at least the next 12-18 months. At the same time, for several reasons, we do not expect the Fed to follow its European peers and establish negative interest rates in the U.S. First, the jury is out as to whether negative rates are actually helping economies recover. Second, money-market funds in the U.S. play an important role in the financial markets, and negative government bond yields would "break the buck." Our advice to fixed-income investors seeking yield is to consider ETF specializing in securitized debt, corporate debt, and high-yield or floating bonds.

Can Housing Sustain the Broad Economy?

Can Housing Sustain the Broad Economy?

Stocks fell on Thursday as investors weighed mixed earnings reports and new retail sales and employment data. Morgan Stanley posted strong second-quarter earnings, driven by fixed-income trading, while Bank of America reported a sharp drop in earnings amid rising loan loss provisions. Johnson & Johnson reported earnings that were down from the prior year but above the consensus forecast, and raised its full-year guidance. First-time unemployment benefit claims rose to 1.3 million for the week ended July 11, above the consensus forecast, while continuing claims, reported with a one-week lag, fell by 422,000 to 17.338 million. Retail sales rose 7.5% in June, above the consensus estimate of 5.0% growth. The Dow fell 0.50%, the S&P 0.34%, and the Nasdaq 0.73%. Crude oil fell 1% to $41 per barrel, while gold dropped $18 to $1795 per ounce.

Stocks fell on Thursday as investors weighed mixed earnings reports and new retail sales and employment data. Morgan Stanley posted strong second-quarter earnings, driven by fixed-income trading, while Bank of America reported a sharp drop in earnings amid rising loan loss provisions. Johnson & Johnson reported earnings that were down from the prior year but above the consensus forecast, and raised its full-year guidance. First-time unemployment benefit claims rose to 1.3 million for the week ended July 11, above the consensus forecast, while continuing claims, reported with a one-week lag, fell by 422,000 to 17.338 million. Retail sales rose 7.5% in June, above the consensus estimate of 5.0% growth. The Dow fell 0.50%, the S&P 0.34%, and the Nasdaq 0.73%. Crude oil fell 1% to $41 per barrel, while gold dropped $18 to $1795 per ounce.