Our Spotlight Stock this month is representative of thriving stock markets—a company that owns and operates exchanges for stocks, options, futures and derivatives. It has grown leaps and bounds, both internally and by acquisition, and numerous opportunities for expansion remain. My Feature further explores those opportunities.
Wall Street’s Best Dividend Stocks 301
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Market Views
Bull Still has Legs
Today, almost two-thirds of NYSE-listed stocks are in an uptrend, the highest proportion since April.
The S&P 500 has gained about 3.75% since August 15, lagging the S&P 600 Small Cap Index, which has returned almost 10%. Meanwhile, the tech-heavy Nasdaq 100, which has led the market for much of the year, has gained 2.7% since mid-August.
Recent strength in small-cap stocks and improving market breadth suggest that this bull still has legs, even if the tech sector has taken a bit of a breather after a furious run-up earlier in the year.
These trends also reflect growing confidence in the U.S. economy. Names growing their earnings at an above-market rate tend to outperform when GDP growth decelerates; these companies don’t need as much help from the broader economy. By the same token, cyclical sectors like banks, energy and industrials tend to lead the way during periods of economic strength.
The combination of a recovery economy and rising interest rates should support cyclical sectors, especially financials.
Elliott Gue and Roger Conrad, Capitalist Times, www.capitalisttimes.com, 888-960-2759, October 9, 2017
More Upside for Now
Nothing has cracked this market; and that alone has suggested we would see more upside in late September and early October, and we have. As it gets more overbought now (not totally jammed, but up there), risk isn’t relegated to the annals of history as some believe, nor is it catastrophic as a few heavy hedge guys have discovered who thought ‘free money’ was easy in recent weeks by being short or owning puts. They got clocked; the equity market moved higher, and now it’s closer to being in an exhaustion phase at least for the short-term, with the forecast move up into early October.
Gene Inger, The Inger Letter, www.ingerletter.com, October 7, 2017
Intermediate-Term Bullish
The weighted equity-only put-call ratio remains on a strong buy signal. It is now approaching the lower regions of its chart, so it can be classified as mildly overbought, but it has not reached the June (multi-year) lows yet. The standard ratio is not as bullish, as it has been moving sideways for nearly two weeks.
Market breadth has been strong, and both of our breadth oscillators remain on buy signals. Cumulative A-D lines are very bullish as well.
Volatility indices remain at very low levels, which is another overbought condition. But there is no real worry until these indices begin to rise and TREND higher.
In summary, we remain bullish for the intermediate-term, as $SPX continues to make new highs, and the indicators remain bullish. The overbought conditions could produce a sharp, but short-lived correction, but would likely not alter the intermediate-term bullishness.
Lawrence G. McMillan, The Option Strategist, www.optionstrategist.com, 973-328-1303, October 6, 2017
To read the rest of this month’s issue, download the PDF.
The Next Wall Street’s Best Dividend Stocks Will Be Published November 8, 2017
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