By Scott Martindale
President, Sabrient Systems LLC

Fear of missing out is suddenly the prevailing sentiment, overwhelming the previously dominant fear of an imminent selloff. I think this is due to a combination of: 1) uncertainty being lifted regarding the election, 2) domestic optimism about the US economy and business-friendly fiscal policies, 3) foreign investors seeing the US as the favored investment destination, 4) the expectation of rising inflation and interest rates rotating capital out of bonds and into stocks, and 5) a cautious but still accommodative Fed. Now that investors can focus on the many positive fundamentals instead of the news headlines, we are seeing healthy market breadth and diverse leadership led by value and small cap stocks rather than just the mega-cap growth stocks (e.g., “FANG”). Such sentiment has been a boon for fundamentals-based portfolios like Sabrient’s. But of course, everyone wants to know, how much further can this rally go? And what happens when it inevitably hits a wall?

In this periodic update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review Sabrient’s weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable ETF trading ideas. Overall, our sector rankings look slightly bullish as post-election adjustments to sell-side EPS estimates are gaining traction in the model, and the sector rotation model continues to suggest a bullish stance. Read more about Sector Detector: What’s next for the post-election rally and rotation?

smartindale / Tag: ETF, sectors, iShares, volatility, S&P 500, SectorCast, technology, healthcare, Financial, energy, SPY, VIX, IYF, iyw, IYJ, IYZ, IYC, IYK, IYH, IDU, IYM, IYE, SOXX, RWW, SLX, XHS, MORT, RDVY, RYF, WBIF, USD, FDM, SYV, BBH, KBWB / 0 Comments

Scott Martindale
By Scott Martindale
President, Sabrient Systems LLC

It is encouraging to see that Q3 earnings season is looking a bit better than expected and is on track to produce positive earnings growth for the first time since Q1 2015 (that was six straight quarters of negative year-over-year growth!) – and on positive revenue growth, to boot. Entering earnings season, Wall Street’s mood had turned negative after an expectation earlier in the year that Q3 would be the big turnaround quarter, so the upside surprises so far have been most welcome.

On the other hand, stocks appear to be enduring something of a “stealth correction” or risk-off activity, which has been impacting small caps much more than the larges. After seven months of expansion (essentially from Feb 11 until Sept 22), market breadth has been shrinking over the past month, as news headlines take the stage away from fundamentals, which is not surprising given the impending election. I think we will see elevated volatility in advance of election day, but after rationalizing what it all means (no matter what result transpires), I expect the market to stabilize – at least until the December 14 FOMC meeting. From a technical standpoint, the proverbial spring remains tightly coiled for a significant move. But even if the initial move is down, I would consider it a buying opportunity, as I think investors will return to a focus on fundamentals, leading once again to healthier market breadth and diverse leadership, with higher prices in our future.

In this periodic update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable ETF trading ideas. Overall, our sector rankings look relatively bullish, although the sector rotation model still suggests a neutral stance. Read on.... Read more about Sector Detector: Earnings looking good and bullish rankings hold steady, but news is now trumping fundamentals

smartindale / Tag: ETF, sectors, iShares, volatility, S&P 500, SectorCast, technology, healthcare, Financial, energy, SPY, VIX, IYF, iyw, IYJ, IYZ, IYC, IYK, IYH, IDU, IYM, IYE, FXL, PJP, RYF, MORT, RYT, BIZD, JHMT / 0 Comments

david trainerThe financial sector is one of four sectors to earn our “dangerous” rating and is the worst-ranked sector in the our 3Q11 Sector Roadmap report according to my methodology at New Constructs. Read more about Don’t Gamble In Financial Sector ETFs

dtrainer / Tag: AFL, C, FAS, FXO, IAK, IAT, IYF, IYG, KBE, KBWP, KCE, KIE, KRE, KRU, MS, PFI, PIC, PJB, RWW, RYF, TRV, UYG, VFH, XLF / 0 Comments