BY Scott Martindale,
Stocks are hitting new highs across the board, even though earnings reports have been somewhat disappointing. Actually, to be more precise, Q4 results have been pretty good, but it is forward guidance that has been cautious and/or cloudy as sales into overseas markets are expected to suffer due to strength in the US dollar. Evidently, U.S. equities remain a relative safe haven for cautious but hungry global investors who have cheap money in their clutches, thanks to global liquidity and currency wars that allow them to benefit on the exchange with a strengthening dollar. Although the SPY chart certainly looks bullish, I still think it is likely that we will get a longer period of consolidation, and perhaps some retesting of support levels, before there is enough conviction to go much higher. Overall, this week's fundamentals-based Outlook rankings look even more neutral in my view -- and perhaps even a bit defensive -- as market sentiment continues to grow more cautionary. Nevertheless, our trend-following sector rotation model retains a bullish bias and suggests holding Technology, Financial, and Healthcare sectors. Also discussed are some alternative highly-ranked ETFs and individual stock ideas from within the top-ranked sectors, and what the model suggests if you prefer a neutral or defensive outlook.
BY Scott Martindale,
Volatility continues as the parade of mixed earnings and economic reports marches along amidst a backdrop of global unrest and economic uncertainties. This has led to a neutral near-term outlook for both the technical picture and fundamentals-based sector rankings. Nevertheless, the longer-term trends appear to favor further flattening of the yield curve and continued strength in the dollar, gold, volatility, and equities. Overall, this week's fundamentals-based Outlook rankings have taken a neutral turn in my view, as market sentiment continues to grow more cautionary. Nevertheless, our sector rotation model has moved to a bullish bias and suggests holding Technology, Financial, and Energy sectors. Also discussed are some alternative highly-ranked ETFs and individual stock ideas from within the top-ranked sectors, and what the model suggests if you prefer a neutral or defensive 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.