The S&P 500 and Nasdaq have moved higher in 16 of the last 18 weeks, and the indices as well as many individual stocks are printing all-time highs on a regular basis. Yet insider-sentiment data from Vickers Stock Research continues to suggest that the major move higher in stock prices is overdone and that caution should be the order of the day.

Monday Tee Up: Let the Shopping Begin

Stocks were mixed on Wednesday morning as investors weighed earnings from Target and new housing market data. Target shares rose more than 3% after the retailer reported strong second-quarter earnings; however, sales fell and management lowered its full-year earnings guidance, citing the impact of inflation on consumer spending. Housing market data was positive. The Commerce Department said that overall housing starts rose 3.9% in July to an annualized 1.452 million units, above the Reuters consensus forecast of 1.448 million. Starts for single-family homes rose at an even stronger 6.7% rate. The Dow rose 0.3%, the S&P rose 0.1%, and the Nasdaq fell 0.2%. Crude oil traded near $81 per barrel, while gold fell slightly to $1934 per ounce.

Monday Tee Up: Inflation, GDP, Costco

Stocks fell sharply on Tuesday morning after Fed Chair Jerome Powell, testifying before Congress, said that interest rates were likely to rise more than previously expected. Mr. Powell said that the process of lowering inflation still had 'a long way to go' to reach the Fed's target rate of 2% and that it was likely to be 'bumpy.' The Dow fell 1.2%, the S&P 1.1%, and the Nasdaq 0.8%. Crude oil fell nearly 3% to $78 per barrel, while gold dropped $31 to trade near $1824 per ounce.

After a drubbing on Wednesday, November 9, the major indices were flat-to-lower for that week-to-date as the market was dealing with a plethora of issues -- from politics, to poor EPS, to the crypto implosion, to worries about the then-pending CPI report. But there are times when the stock market takes a stance only to be surprised by something out of the blue. Indeed, stocks saw an historic day on Thursday, November 10 -- and then added to those gains the next day.

Stocks were mostly higher on Thursday morning amid more signs of moderating inflation. The Labor Department said that its producer price index for final demand fell 0.5% in July, down from a 1.0% increase in June. The reading was the first negative number since April 2020 and below the Reuters consensus forecast, which called for an increase of 0.2%. The Dow rose 0.5%, the S&P rose 0.4%, and the Nasdaq was flat. Crude oil rose 1.5% to $93.50 per barrel, while gold rose $8 to $1806 per ounce.

Reading Tea Leaves on the Labor Market |Jobs Friday

Small- and mid-cap stocks (SMID stocks) have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine. As well, the prices of SMID stocks generally are lower than the prices of large-caps. That said, SMID stocks can be risky and large-caps outperformed SMID stocks in 11 of the 19 years in our test period. 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 12%-15% of the U.S. stock market's capitalization is comprised of SMID stocks. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Small- and mid-cap stocks (SMID stocks) have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine. For another, the prices of SMID stocks generally are lower than the prices of large-caps, as the P/E ratio on the Russell 2000 Small-Cap Index is 16x compared to a P/E of 27x for the S&P 500. Finally, the long-term record has favored SMID stocks over large-caps. From 2003-2021, the Russell 2000 Index had climbed 544%, compared to an advance of 401% for the S&P 500 index. Here are a handful stocks with market caps below $20 billion that are on the Argus BUY list.

Market breadth remains on the weak side, a bearish sign for stocks. However, some breadth indicators have reached oversold territory and levels that historically have preceded intermediate-term bottoms. There is one big assumption here: that the stock market is still in a bull market and the current decline won't turn into a bear market. As we have been saying, we think this is a correction in a bull market, and not something far worse.

The stock market was mixed last week amidst a slowing stream of earnings that mostly featured retail names. Tech stocks outperformed blue chips, possibly owing to COVID news that trended unfavorably throughout the week. During Friday's session, the Dow Jones Industrial Average fell 269 points, or 0.75%. The S&P 500 was down 0.14%, and the Nasdaq Composite was up 0.40%. For the week, the DJIA was down 498 points, or 1.38%, the S&P 500 was up 0.32%, and the Nasdaq Composite was up 1.24%. Year-to-date, the DJIA is up 16.32%, the S&P 500 is up 25.08%, and the Nasdaq Composite is up 24.59%.

Rocket Companies is a financial services company that was originally founded as Rock Financial in 1985 and is currently based in Detroit. Rocket Companies offers a wide array of services and products but is best known for its Rocket Mortgage business. The company’s mortgage lending operations are split between its direct-to-consumer lending, which sees borrowers accessing the company’s lending arm directly through either its mobile app or website, and its partner network where mortgage brokers and other firms use Rocket’s origination process to offer loans to their customers. The company has rapidly gained market share in recent years and is now the largest mortgage originator in the U.S. as well as the servicer for more than 2 million loans.

Small- and mid-cap stocks (SMID stocks) soared in 2019. They have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be poised to rebound more quickly once COVID-19 vaccines are more widely distributed and the domestic service economy recovers. As well, the prices of SMID stocks generally are lower than the prices of large-caps. That said, SMID stocks can be risky. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. Investors used to use a $2 billion market-cap threshold to define a small-cap stock and a $10 billion threshold for a mid-cap. The Russell 2000 index now includes numerous companies with market capitalizations above $15 billion. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Small- and mid-cap stocks (SMID stocks) soared in 2019. They have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be poised to rebound more quickly once COVID-19 vaccines are more widely distributed and the domestic service economy recovers. As well, the prices of SMID stocks generally are lower than the prices of large-caps, as the P/E ratio on the Russell 2000 Small-Cap Index is 18x compared to a P/E of 27x for the S&P 500. Finally, the long-term record has favored SMID stocks over large-caps. From 2003-2021, the Russell 2000 Index had climbed 488%, compared to an advance of 408% for the S&P 500 index. This week's list includes stocks with market caps below $20 billion that are on the Argus BUY list and are included in our Mid-Cap Model Portfolio.

This edition features potential healthcare policy changes; a quarterly housing outlook; Costco's pricey shares; and notes from DocuSign, Wells Fargo, and new coverage Rocket Cos.

Stocks were flat on Wednesday morning as investors weighed new housing market data and awaited the release of the Fed's latest meeting minutes this afternoon. The Commerce Department said that U.S. housing starts fell 7.0% in July to an annualized 1.534 million units, down from 1.650 million in June and below the Reuters consensus of 1.6 million. However, building permits rose 2.6% last month to an annualized 1.635 million. The Dow fell 0.1%, the S&P was flat, and the Nasdaq rose 0.1%. Crude oil traded near $66 per barrel, while gold fell $5 to $1783 per ounce.

The second quarter in 2021 was a good one for stocks, as the S&P 500 increased more than 8.5%. The average stock in the Argus Universe of Coverage advanced 5.5%, and the median stock gained 4.0%. The average Argus BUY-rated stock increased 6.0%, while the average HOLD-rated stock rose 4.0%. Will investors continue to favor value in 2021? Will small-caps continue their recent strong run? Given low interest rates, we expect growth stocks will resume outperformance over time -- but think this may be the one year in five when value leads. Investors seeking value are encouraged to focus on dividends and look for yields in the 3%-4% range. As for small-caps, the promise of the vaccine is encouraging for these companies, which typically don't have the gilt-edged balance sheets of large-caps and are more dependent on a strong U.S. economy. Small-cap valuations remain depressed despite the recent run, and this group continues to look well-positioned in 2021.

The rotational trends in insider-sentiment that we discussed last week remain in place for a second week. But the overall insider-sentiment picture gleaned from the weekly data supplied by Vickers Stock Research remains noticeably cautious. This 'more cautious than we prefer' status has been in place for all of 2021, and we continue to tag it as stubborn. Insider sentiment is not so bad as to call for a defensive posture, but it is far from bullish and stuck in a range. Specifically, Vickers' benchmark NYSE/ASE Eight-Week Sell/Buy Ratio has been between 4.58 and 5.97 since early January. Currently, it is at 4.78.