BY Scott Martindale,
After a requisite knee-jerk selloff, stock market bulls shook off Russia's military action in Ukraine as just another buying opportunity. The S&P 500 large cap index set yet another all-time intraday high and closed at a new record high on Friday. However, the technical condition is getting overbought, and Sabrient's SectorCast rankings have moved from bullish to a more neutral bias. Among the ten U.S. business sectors, the performance leaders last week were Financial, Basic Materials, and Industrial, which is typical bullish behavior. With capital flowing into both U.S. Treasuries and equities, we are seeing the 10-year Treasury yield remain low even as stocks hit new highs. This is creating the double-barreled power of lower mortgage rates (to goose the housing market) and a growing "wealth effect" from rising housing and stock prices. Overall, although the market might be ready to take a breather at the current level and perhaps even pull back a bit, the path of least resistance for the foreseeable future is still up. Our Sector Rotation Model suggests holding Technology, Financial, and Healthcare in the current bullish climate. Also discussed are some highly-ranked ETFs and individual stock ideas from within the top-ranked sectors, and what the model suggests if you have a neutral or bearish outlook.
BY Scott Martindale,
Facing formidable resistance and the threat of an ominous triple-top sell signal, U.S. stocks appear to have successfully navigated a critical crossroads by finding the wherewithal to break out to new highs, with blue skies above. Among the ten U.S. business sectors, the performance leaders last week were Consumer Services, Consumer Goods, Industrial, and Financial. Now the question is whether stocks can confirm the nascent breakout in the face of new global and domestic challenges. "Inclement weather" has been both real and metaphorical, and both are impacting the economy. Our Sector Rotation Model suggests holding Technology, Financial, and Healthcare in the current bullish climate. Also discussed are some highly-ranked ETFs and individual stock ideas from within the top-ranked sectors, and what the model suggests if you have a bearish outlook.
StyleMap® depictions of characteristics are produced by Fidelity using data from Morningstar, Inc. StyleMaps estimate characteristics of a fund's equity holdings over two dimensions: market capitalization and valuation. The percentage of fund assets represented by these holdings is indicated beside each StyleMap. Current StyleMap characteristics are denoted with a dot and are updated periodically. Historical StyleMap characteristics are calculated for the shorter of either the past three years or the life of the fund, and are represented by the shading of the box(es) previously occupied by the dot. StyleMap characteristics represent an approximate profile of the fund's equity holdings (e.g., domestic stocks, foreign stocks, and American Depositary Receipts), are based on historical data, and are not predictive of the fund's future investments. Although the data are gathered from reliable sources, accuracy and completeness cannot be guaranteed.