The S&P 500, Nasdaq, and Nasdaq 100 (QQQ) haven't seen much follow-through over the last five days. The S&P Mid-Cap 400 and Russell 2000 (IWM) have made some headway, with the "400" approaching its all-time closing high (ATH) from May 7 and the small-caps nearing their ATH from March 16.

We continue to (mostly) ignore market sentiment as bullish extremes become even more extreme. Indeed, other than some mild pullbacks, we haven't seen anything close to real fear since the COVID-19 collapse in February and March of 2020.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Stocks kept the momentum going in April, and are now up almost 12%, including dividends, in the year-to-date. Our analysts have been progressing through earnings season, and have come across many stocks in coverage that have approached target prices. We set target prices through our valuation framework, which includes analysis of historical multiples, peer multiples, 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 on which we have raised target prices over the past month. All stocks are rated BUY at Argus.

Stocks rose modestly on Thursday morning, but gave up strong early gains amid a range of first-quarter earnings reports and new GDP and employment data. Investors also weighed President Biden's ambitious plans for new spending on families and education. The Commerce Department said that the U.S. economy expanded at a 6.4% annualized rate in the first quarter, above the Reuters consensus forecast of 6.1% and up from 4.3% growth in the fourth quarter. The Dow rose 0.1%, the S&P 0.3%, and the Nasdaq 0.1%. Crude oil rose 1.5% to $65 per barrel, while gold traded near $1768 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.

Stocks fell for a second day on Tuesday morning, led by sharp declines in the Financial and Energy sectors. IBM shares rose more than 4% following stronger-than-expected first-quarter sales and earnings, helped by strength in the company's cloud computing business. On the negative side, Abbott Laboratories fell sharply after reporting slightly lower than expected sales, including a sequential decline in revenue from coronavirus test kits. The Dow fell 0.9%, the S&P 0.9%, and the Nasdaq 1.1%. Crude oil traded near $62 per barrel, while gold rose $9 to $1780 per ounce.

Our rating on the Industrial sector is Over-Weight. After enduring the challenges of the pandemic, the cyclical stocks in the sector appear well positioned within the changing political environment. Specifically, we believe that Industrial stocks will benefit from enhanced infrastructure investment and more-lenient trade policies during the Biden administration. The Industrial sector accounts for 8.9% of S&P 500 market capitalization. Over the past five years, the weighting has ranged from 7% to 12%. We think that investors should allocate 9%-10% of their diversified portfolios to the group. The sector includes industries such as transportation, aerospace & defense, heavy machinery and electrical equipment. The sector is outperforming the market thus far in 2021. It underperformed in 2020, with a gain of 9.0%, and slightly underperformed in 2019, with a gain of 26.8%. Here are some of our top Industrial picks, all of which are rated BUY at Argus.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Stocks rose on Wednesday morning, led by the Energy and Industrial sectors, amid a second day of congressional testimony from Fed Chair Jerome Powell and Treasury Secretary Janet Yellen. IHS Markit said that its flash manufacturing purchasing managers' index rose to 59 in the first half of March, up from 58.6 in February but slightly below the Reuters consensus forecast of 59.3. The Commerce Department also reported a 0.8% decline in core capital goods orders last month, down from growth of 0.6% in January. The reading also missed the consensus forecast of 0.5% growth. The Dow rose 1.0%, the S&P 0.7%, and the Nasdaq 0.1%. Crude oil traded near $60 per barrel, while gold rose $5 to $1730 per ounce.

While the S&P 500 remains very close to all-time highs, the Nasdaq and QQQs remain skittish as the trend in 5- to 30-year Treasury yields is firmly to the upside. While the level of rates is historically low, the slope of the yield advance is steep.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

In early January, we wrote the following. "Don't look now, but interest rates at the long end of the curve are moving higher. With the whole curve historically low, does it really matter? Could it actually be bullish for certain sections of the stock market? Certainly not high-yield plays, but for those stocks that benefit from a faster growing economy? Remember those days? There are lots of questions but no definitive answers -- so watch price action to give us a clue.

Stocks were mostly higher on Thursday morning, led by the Technology sector, following new employment data. The Labor Department said that first-time claims for state unemployment benefits fell to 793,000 for the week ended February 6, down from a revised 812,000 a week earlier but above the Bloomberg consensus forecast of 760,000. The Dow was flat, the S&P rose 0.1%, and the Nasdaq rose 0.4%. Crude oil fell slightly to $58.50 per barrel, while gold traded near $1838 per ounce.

Just before the 2020 holiday season, we started commenting on insider sentiment that was trending in a bearish direction. Two weeks ago, we started to pound the table a bit, as the broadest sell/buy ratio from Vickers Stock Research (the Total Eight-Week Sell/Buy Ratio, which includes all insider transactions that meet the criteria for inclusion in the Weekly Insider Report) started to reach worrisome levels. By the numbers, the ratio was 8.63 last week (with anything over 2.50 bearish) and included a Nasdaq component reading of 10.63.

Stock prices, as expressed by the S&P 500, remain above fair value, which our model pegs at closer to 3200 due to the expected earnings decline in 2020. Our stock-market valuation model takes into account factors such as stock prices, five-year normalized earnings (three historical years, two forward-looking), GDP, inflation, and T-bond and T-bill yields. We note that stocks rarely trade right at fair value. Since 1960, on average, the index has traded at a tight 2% above fair value, but the standard deviation to the mean is 16%. As such, we normally expect the S&P 500 to trade between 14% undervalued and 18% overvalued. At current prices, the stock market is almost 20% above fair value, implying that investors are quite optimistic about equities in the coming months. We'd feel better about the outlook for stocks if valuations were not so stretched. Several factors could improve valuations: a pullback in stock prices; lower bond yields; or better earnings, as the current 4Q EPS reporting season is expected to be the final negative comparison year over year related to the pandemic.

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 Director of Research Kelleher typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus.

We saw some strange days late last year, and the majority of them had to do with the massive rotation that was happening at the time. But maybe we should start calling days like Thursday more the norm than wacky. As we said a few days ago, 2021 is starting out as the polar opposite of 2020 -- at least as far as the markets are concerned.

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 Anthem Inc (ANTM); Activision Blizzard Inc (ATVI); Coca-Cola Co (KO); International Business Machine (IBM) and the Focus List deletions are Procter & Gamble Co. (PG); Electronic Arts, Inc. (EA); CIENA Corp. (CIEN); Vertex Pharmaceuticals, Inc. (VRTX).

ARGUS ANALYSTS' TOP PICKS FOR 2021

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Maybe you intend to catch-up on certain things over the holidays. That's what defensive sectors appear to be doing in the fourth quarter. At the nine-month mark, income-oriented, defensive, and/or cyclical sectors were deeply lagging -- and they won't catch the leaders in 2020. But in the past two months, formerly unloved sectors have meaningfully closed the gap.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Stocks were mixed on Wednesday morning after reaching record levels on Tuesday. On the employment front, first-time claims for state unemployment benefits rose to 778,000 for the week ended November 21, up from 748,000 a week earlier and above the Bloomberg consensus forecast of 730,000. Core capital goods orders excluding aircraft rose 0.7% in October, down from 1.9% in September but above the consensus forecast of 0.5% growth. The Dow fell 0.6%, the S&P fell 0.3%, and the Nasdaq rose 0.1%. Crude oil traded near $45 per barrel, while gold rose $5 to $1809 per ounce.

This edition features digital ad spending outlook; pandemic's impact on payments industry; chipmakers; and notes from Boeing, Amazon, and Curaleaf.