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

By Scott Martindale
President, Sabrient Systems LLC

As Q3 came to a close, investors continued to show cautious optimism and the S&P 500 posted a gain for the fourth straight quarter. After a lengthy period of time in which markets were buffeted by the daily news about oil prices, jobs reports, Fed rate hike intentions, China growth, Brexit, US economic expansion/contraction, Zika virus, and ISIS inspired attacks, the focus has switched back to improving fundamentals.

In particular, as Q3 earnings reporting season gets started, there remains a broad expectation that the corporate “earnings recession” has bottomed and that companies will start showing better earnings growth (hopefully driven by revenue growth), particularly in the beaten-down market segments like Energy and Materials. I think the only thing holding back stocks right now is investor uncertainty about market reaction to two things: a potential Trump presidential victory and to the next Fed rate hike (expected on December 14). From a technical standpoint, the spring is coiling tightly for big move.

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 more about Sector Detector: Stocks coil as Q3 earnings take the stage and election campaigns heat up

Scott MartindaleAnother solid year for U.S. equities came to a close. But it’s not like everyone is jumping up and down with enthusiasm, which is a good thing. With plenty of bogeymen in the closet and under the bed, there is little in the way of irrational exuberance. Read more about Sector Detector: Bulls close out another solid year with expectation of further gains but higher volatility in 2015

With warmer weather arriving to melt the early snowfall across much of the country, investors seem to be catching a severe case of holiday fever and positioning themselves for the seasonally bullish time of the year. And to give an added boost, both Europe and Asia provided more fuel for the bull’s fire last week with stimulus announcements, particularly China’s interest rate cut. Yes, all systems are go for U.S. equities as there really is no other game in town. Read more about Sector Detector: Holiday fever takes hold of stock investors, but a pullback is needed

After displaying a classic V-bottom reversal to what turned out to be a quick and anemic attempt by the bears to bring about a real correction, bullish fervor is becoming contagious, especially as the traditionally strong holiday season approaches. Indeed, the brief selloff was snatched up as a buying opportunity as I predicted it would, but my concerns about the market consolidating and struggling to hit new highs before year end were quickly dismissed. So, with nothing but blue skies overhead, will the party simply roll on? Read more about Sector Detector: Bulls rule as volatility recedes and investors position for holiday cheer

Yes, the market showed significant weakness last week for the first time in quite a while. In fact, the Dow Jones Industrial Average moved triple digits each day. But it was all quite predictable, as I suggested in last week's article, and certainly nothing to worry about. Now the market appears to be poised for a modest technical rebound, and longer term, U.S. equities should be in good shape for a year-end rally. However, I still believe more downside is in order before any new highs are challenged. Read more about Sector Detector: Stocks fight off predictable weakness, but expect more downside

Scott MartindaleThe technical picture for stocks has shifted from bearish into neutral, and our fundamentals-based sector rankings appear to have moved from bullish to neutral, as well. Thus, caution remains the order of the day until either the bulls or bears can find a catalyst -- and enough recruits -- to move the ball in their direction. Read more about Sector Detector: Stocks stuck in neutral as both sides seek a directional catalyst

smartindale / Tag: iShares, sectors, ETF, SPY, VIX, IYF, iyw, IYJ, IYZ, IYC, IYK, IYH, IDU, IYM, IYE, FTEC, FHLC, FUTY, FSTA, FIDU, SOXX, FXR, KBWP, SYNT, SNDK, WSO, HII, SBNY, RNR / 0 Comments

Scott MartindaleThe sudden bearish turn last week in the market -- after hitting new highs the prior week -- has come fast and furious as selloffs are wont to do. And the pullback might have further still to go. But there are several reasons to expect a stabilization or bounce during this holiday-shortened week, and in any case I still expect that it eventually will turn out to be a great buying opportunity leading to higher prices later in the year. Read more about Sector Detector: Fast and furious selloff provides important market cleansing

smartindale / Tag: sectors, iShares, ETF, SPY, VIX, iyw, IYH, IDU, IYJ, IYE, IYK, IYC, IYZ, IYM, IYF, TFX, EIX, GAS, CELG, VMW, AXE, SOXX, BBH, FXU, FTEC, FHLC, FUTY, FSTA, FENY, FIDU, NFLX, DDD, ACT, JAZZ / 0 Comments

Scott MartindaleStocks continued last week to seek some firmer footing, as prices found some support and volatility hit some resistance, and a flight to safety of global capital benefited long-term Treasury bonds -- the very assets that are supposed to be selling off in a secular “Great Rotation” into equities. Read more about Sector Detector: Flight to safety may serve as prelude to flight to quality stocks

smartindale / Tag: iShares, ETF, sectors, SPY, VIX, IYF, iyw, IYJ, IYH, IYK, IYC, IYZ, IYE, IYM, IDU, EEM, GOOG, FB, CAT, CVX, XOM, COP, SOXX, PPH, KRE, CACC, SIVB, FLT, CTSH, ACT, MWIV / 0 Comments

You should sit in meditation for twenty minutes every day – unless you’re too busy;   - then you should sit for an hour.”--Old Zen adage

Batten down the hatches. The Congress critters are at it again. Read more about ETF Periscope: Riding the D.C.-to-Wall Street Volatility Express

daniel / Tag: VIX, VXX, DJIA, SPX, COMP, FDN, SOXX, FXL, QTEC, SMH, IGV / 0 Comments

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