What the Market Wants: Dead Cat Bounce?

The market did rebound last week, but it’s not much to brag about. Large-cap Value led the style/caps, up a paltry 1.42%, while Mid-cap Value dropped a tad, down -0.11%. It’s worth noting that Large-cap Value led not only last week, but last month and the last 3 months (see market stats). While it hasn’t been that great over the past 3 months, it has been the best of the worst. 

Today the market is doing next to nothing. Apple (AAPL) and EBay (EBAY) led the NASDAQ up almost 1%, but the Dow Jones is down and the S&P 500 is near zero.  As in the past several weeks, most economic readings were a tad on the weak side, especially Michigan Consumer Sentiment on Friday.  Price data was flat, indicating there is little worry about inflation.

Not much news this week besides some housing reports, Initial Jobless Claims, and finally LEI on Friday.  The real news of the week should come from the FOMC meeting and Bernanke’s comments on Wednesday.  With the next meeting six weeks away, this week’s meeting is probably the last chance to impact the economy before the election.  Furthermore, the G-20 meets in Mexico this week, and there could be further action regarding Europe’s malaise now that the Greek elections appear to have delivered the Greeks a government that at least intends to be co-operative with the ECB.  Of course, Syrian violence and the military issues in Egypt’s government will require attention as well.  It is likely that this will be one of the more stressful G20 meetings.

Sectors are very tough to call. Last week, Energy led the way but is dead last today. Financials are not doing well today, with Spain’s sovereign debt yield back above the unmentionable 7% level!  Our SectorCast 30-day outlook is favoring Healthcare, Industrials, and Technology, but predictions about sectors are a real “roll of the dice,” given world tensions and the gridlock in Washington. Last Friday’s poor Consumer Sentiment reading does bode well on top of everything else, but it likely reflects the tentative market and favor for Large-cap Value that we have seen over the past six weeks.

Here are the market stats.

 Our picks for last week all did nicely (CJES was a standout, up nearly +5%).  

4 Stock Ideas for this Market

This week, I used the GARP preset search in MyStockFinder, including only Large-cap stocks. Here are four you may find interesting:

HCA Holdings Inc. (HCA)—Healthcare
Cerner Corporation (CERN)—Healthcare
Southwest Airlines Co. (LUV)—Industrials
AFLAC Inc. (AFL)—Financials

Until next week,

David Brown
Chief Market Strategist

Sabrient Systems

Full disclosure:  The author does not hold positions in any of the stocks mentioned in this article.

© 2012 Sabrient Systems, LLC