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Courtesy of Walter Gault, Communications Editor, Sabrient
New Dynamic?
Editor’s Note: Walter Gault is our guest editor this week. Walter is stock analyst and communications editor at Sabrient. David Brown, chief market strategist for Sabrient Systems, will be back next week.
This week marks the beginning of corporate earnings season. There was light trading today, as investors remained cautious.
Leaders from Germany and France are holding another round of 2-way economic discussions. The euro is at a 16-month low which has pushed the dollar higher. More key auctions on European debt are expected this week as well.
Last week, the market was timidly up on a stronger dollar, which seems to indicate that investors are itching to put their money into U.S. stocks. Typically, a stronger dollar has resulted in weakness in U.S. stocks and commodities. This is because global buyers can’t buy as much with their local currencies in the way of goods, services, and materials that are priced in dollars. Or put another way, sales into global markets don’t exchange into quite as many dollars for the U.S. companies that sell those goods. So, the fact that stocks are holding up in the face of a strengthening dollar is a bullish sign.
Could it be the beginning of a new dynamic in which stocks rise along with the dollar? This would likely mean that emerging markets and stagnating developed markets are losing investors to the safety of U.S. dollars, Treasuries, and equities.
The national unemployment rate fell to 8.5%, and the private sector added 212K jobs last month. While this is an improvement, unemployment is expected to remain high far into the future.
The Detroit Auto Show is this weekend, and it is expected to be dominated by domestic vehicles. Always exciting, the Consumer Electronics Show in Las Vegas, will bring out the most cutting-edge technology.
Market Stats. Last week most sectors were up over +2% with Basic Materials leading the charge, up +6%, and Utilities bringing up the rear, falling -0.66%. Large-cap Value continues to be the most rewarding cap-style, while the entire Small-cap category has recently brought the lowest returns.
Looking forward, Healthcare, Energy, Basic Materials, Financials, Technology, and Industrials are favored in our SectorCast ranking.
4 Stock Ideas for this Market…
