We saw some strange trading days in late 2020, 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, January 14 more the norm than wacky. As we said recently, 2021 is starting out as the polar opposite of 2020 -- at least as far as the markets are concerned.

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.

The housing market -- a major pillar of U.S. economic growth pre-pandemic -- is rebounding. Existing home sales, which were down 32% in May from January, have been rising consistently since late spring and are closing in on a 100% increase from May lows. Building permits, which are a leading indicator for the industry, peaked in January at 1.55 million units and are now back above that level (data through November). They too have lifted more than 50% from April's lows. Prices have held up as well. The S&P/Case-Shiller National Home Price Index is one of the most closely watched barometers of the housing market. Data for October 2020 showed that prices gained 7.9% year-over-year -- the highest rate in six years. Meanwhile, inventory levels are tight: currently there is a low 4.1-month supply of existing homes for sale (the average range is 4.5-7.5 months), according to the U.S. Census Bureau. On the other side of the pandemic, we expect demand for homes -- with yards between neighbors and no elevator buttons to press -- will remain strong.

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).

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

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.

Like the kid in "The Polar Express," we want to believe in Santa -- or at least his rally. The Santa Claus Rally is more than just a good December. It refers to the market's performance over the final five trading days of the current year and first two trading days of the new year. This year, it began with Thursday, 12/24/20, encompasses the current (shortened) trading week, and will conclude on 1/5/21.

Growth stocks may be outperforming value, again, in 2020. But in an environment of historically low interest rates (and with the coronavirus and economic shutdown seemingly poised to keep them low for a long time), many investors are still searching for high levels of income, which can often be found in value stocks. Progress on COVID-19 vaccines has given a lift to some of the cyclical companies (energy companies and regional banks) that have lagged in recent quarters, and value stocks have kept up the pace with growth stocks in the past quarter. The current yield on the iShares Russell 1000 Value Index ETF is 2.5%, compared to the 1.0% current yield on the iShares Russell 1000 Growth Index ETF. This is not unimportant, as the current yield on the 10-year Treasury bond is 0.95%.

Stocks fell on Friday morning as a long-awaited fiscal stimulus package remained elusive despite signs that Democrats and Republicans were moving closer to an agreement. Congress is instead likely to first pass another stopgap spending bill that will keep the government running past midnight, while also providing time for additional stimulus negotiations. The package under discussion reportedly includes one-time payments of $600 to most Americans, extended unemployment benefits, help for states in vaccine distribution, and aid for small businesses. The Dow fell 0.6%, the S&P 0.6%, and the Nasdaq 0.3%. Crude oil traded near $49 per barrel, while gold rose $1 to $1892 per ounce.

After a strong first week of December, stocks stalled in week two. Concerns about the economy faltering from the current COVID-19 wave were punctuated when weekly initial unemployment claims were at the highest reading since September, and continuing claims increased. Hopes that the report would spur action on a stimulus package were dashed when Congress went home for the weekend with nothing settled.

Into the Home Stretch: Our Monthly Survey of the Economy, Interest Rates, and Markets

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.

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

The Technology sector has led the market recovery from the COVID-19 depths of March 2020. Through November 20, the sector was up 31% for the year, compared to a 10% gain for the S&P 500. The Tech sector is the largest in the U.S. market and now accounts for more than 27% of the S&P 500. Over the long term, we expect the Tech sector to benefit from pervasive digitization across the economy, greater acceptance of transformative technologies, and the development of the Internet of Things (IoT): Healthy company and sector fundamentals are also positive. For individual companies, these include high cash levels, low debt, and broad international business exposure. We have an Over-Weight ranking on the Tech sector and think investors should look to allocate up to 30% of their diversified portfolios to the group. Here is how we use our Tech sector ideas from our analysts in our Focus List and Model Portfolios.

It has been a November to remember, so far. Since the October 30 close, the S&P 500 has advanced 9.3% in just a handful of trading days. That can often be a harbinger of better days to come in the market -- particularly when short and furious rallies occur in the final quarter.

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

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 strongly on Tuesday morning as American voters went to the polls and waited anxiously for the first returns this evening. Despite substantial uncertainty about the counting of mail-in ballots, tightening polls in several swing states, and control of the Senate, the rally suggested that investors were betting on a clear victory for Joe Biden and Senate Democrats, and on the economic boost that would come from a strong fiscal stimulus package. The Dow rose 2.5%, the S&P 2.3%, and the Nasdaq 2.1%. Crude oil traded near $38 per barrel, while gold rose $15 to $1908 per ounce.

Final Thoughts on Market Tendencies around the Election

In the past few weeks, the S&P 500 has drifted down from its October closing high of 3,534 on 10/12/20, hit an end-of-day low of 3,427 on 10/19/20, and worked back up to 3,465 at the close on October 23. The market is down about 2% from that mid-October high but still up 3% for the month, coming off September's 4% decline.