BY Scott Martindale,
In the ongoing bad-news-is-good-news saga, last week's surprisingly weak jobs report led to speculation that the Fed would delay hiking interest rates, which is perceived as a positive for equity investors. So, bulls are getting a boost for the moment, although those previously hard-won round-number price levels for the major indexes are now serving as ominous overhead resistance that will likely require a strong new catalyst to break through. Whether stocks are destined for downside or upside from here, Q1 earnings season starts this week and will likely provide the catalyst. Notably, the earnings bar has been lowered considerably. From a technical standpoint, stock are struggling in neutral territory and seeking a direction, and my inclination is that we will see another continuation to the upside.. Overall, this week's fundamentals-based Outlook rankings still look mostly bullish to me, with the top four (and six of the top seven) economically-sensitive or all-weather. Our trend-following sector rotation model retains a neutral bias and suggests holding Healthcare, Technology, and Financial 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.
Sector Detector: Defensive sectors lead hesitant market, but traders honor long-standing bullish supportBY Scott Martindale, Sabrient - 03/30/2015
Last week, the major indexes fell back below round-number thresholds that had taken a lot of effort to eclipse. There has been an ongoing ebb-and-flow of capital between risk-on and risk-off, including high sector correlations, which is far from ideal. But at the end of it all, the S&P 500 found itself right back on top of long-standing support and poised for a bounce, and Monday's action proved yet again that bulls are determined to defend their long-standing uptrend line. As we reach the end of Q1, the top performing sector so far this year has been Healthcare by a wide margin, followed by Consumer Services (Discretionary/Cyclical), and then Telecom, which are all defensive (or all-weather).From a technical standpoint, the SPY chart remains bullish as yet again, for the sixth time in less than four months, the lower uptrend line of the long-standing bullish rising channel is providing reliable support, and the small-cap chart is even stronger. Overall, this week's fundamentals-based Outlook rankings still look mostly bullish to me, with the top four (and six of the top seven) economically-sensitive or all-weather. Our trend-following sector rotation model moved to a neutral bias at Friday's close, 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.
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