Pre-market equity futures are slightly up as we head into a huge week for new economic data (fed meetings, GDP report and lots of corporate earnings announcements). Obviously equity markets have been ugly this year (the Nasdaq 100 is ~25%), but we’ve seen signs of a recovery in the last two weeks (e.g. rates down, equities up). For a little more perspective, consumer sentiment is also very low, but has picked up a bit recently. Here is a reminder of how markets often perform following low points in the Michigan Consumer Sentiment Index.
Dividend Aristocrats: A Look Under the Hood
There is almost a mystical aura surrounding the 60+ “Dividend Aristocrats.” To be included on this exclusive list, you must be an S&P 500 stock that has increased its dividend for at least 25 consecutive years. And there are many highly-respected companies on the list, including the likes of Johnson & Johnson (JNJ), Procter & Gamble (PG) and Exxon Mobil (XOM). However, before you go buying any stock just because it’s on this list, there are a few things you need to consider. Let’s start by looking at the list (below) and then dive into some details.
Growth Stocks Soaring Today!
Today is a monster “UP day” so far for most of the stocks that have sold off the hardest this year. In particular, we’ve seen high-revenue-growth companies with very weak earnings gaining 8%, 9%, and 10%+ today alone. What’s more incredible, if the rebound continues (which it will—eventually) these will be the types of stocks to gain the most.
New Watchlist: High-Income Allstars
As the market continues to rip higher today, we’ve added a new watchlist to the members only page called “High Income Allstars.” The list includes some of the most popular (and most widely followed) high-income securities in the market. We own a few of these names, and If you are an income investor—you’ve likely heard of most of them. It’s a great tool to follow what’s moving in the market and where the opportunities may be.
Reading the Tea Leaves: Increasing "All Clear" Signs?
Arguably, the ARK Innovation ETF (ARKK) was a leading indicator for the market during the pandemic bubble and then bust. And now ARKK—as well as the Nasdaq 100 (QQQ)—are now showing signs of strength from a technical standpoint. For starters, each of these two bellwethers (purple) have now broken above their 50-day moving averages (orange), while the S&P (SPY) and Dow (DIA) haven’t yet.
The Next Batch of Growth Stock Rockets?
With pre-market futures trading higher, and the market now a bit above its year-to-date lows, some investors are wondering if the selloff is finally over. To the contrary, this market can absolutely go lower from here, but in the long-term we believe “this too shall pass” and this market is eventually going higher. And the next cycle higher will likely be dominated by a new batch of “high growth” stocks. For your reference, here is a look at 28 of the highest revenue growth stocks (this year and next) that have not already grown very large.
25 Top Chip Stocks, Down Big (Sorted By Profit Margin)
200+ Big-Dividend Preferred Stocks for You to Consider
If you don’t know, preferred stocks can work a lot like bonds when interest rates rise (that’s why many prices are down and yields are up this year), but they are distinct in that they’re lower than bonds in the capital structure (but still higher than common shares), and preferred shareholders can basically get screwed in a bankruptcy (preferreds are not a loan, they are a form of equity). This report offers more details, including current data (yields, prices, recent performance, industries) on over 200 preferred shares for you to consider.
Contrarian Warning Signs
The S&P 500 is down 18.5% year-to-date and performance has been wide ranging. It’s highly unusual for a large swath of the index to be down over 40% and another group to be up more than 20%. But a look under the hood reveals many of the top performers have been “safety plays” such as lower beta utilities and pharmaceutical companies, and many of the worst performers are great companies now trading at very attractive valuations. Those who chased high growth at the end of 2021 got burned. Will those now flocking to high-flying energy and low-beta utilities stocks soon get burned too?
Resistance at the 50-Day Moving Average, Again?
The Week Ahead: Inflation, Earnings and Energy
Is The Fed Too Powerful?
Futures are lower this morning, as the market seems set to take a breather from its sharp move higher in recent session, especially for higher-risk growth stocks. But as we review some of the stocks that have been performing extremely well, its worth asking the question “does the fed have too much power over the stock market?”
Is This Dead Cat Bounce Different?
With futures pointing higher, the market is set to rise for a third day in a row. And some investors are starting to think these gains are different than the dead cat bounces we’ve repeatedly experienced this year because this time commodity prices are down, the dollar is strengthening and the fed may finally be ahead of inflation.
The Fed Is Fearful, Time to Get Greedy?
The minutes from the Fed’s June meeting were released today, and they show a continued laser-focus on inflation (i.e. the fed is scared). Yet interestingly, Energy stocks and 10-year treasury rates keep declining in what may be a case of the market being a few steps ahead of the minutes from a meeting that took place in the past. For example, here is a look at the one month performance of energy stocks, and it has been ugly!
Signs of Slowing Inflation
S&P futures are hovering around flat to slightly negative so far this morning, as we head into a day where the upcoming release of last week’s fed meeting minutes may already be outdated. Both treasuries and commodity prices have been trending lower, a sign that the fed’s inflation fight may be less dire than last week’s minutes convey. Markets tend to recover long before recessions end. This report shares data on past recessions, chip stock valuations (e.g. Nvidia, AMD, Micron and Intel) and an update on the market’s technical position.
Positve Signals: Growth Stocks Up, Commodities Down
BH THINKER: The Worst First Half for Stocks in 50 Years
10-Day Market Reversal
Lead of Value Over Growth
10-Year Treasury vs Growth Stocks
As you can see in the following chart, there has been a high correlation between high-growth stocks (as measured by the Ark Innovation ETF (ARKK)) and the 10-year treasury rate. More so than for the S&P 500 or the Dow.
The reason is because as the fed raises rates to fight inflation, they slow down the economy as a side affect, and the most growth-oriented names are the most negatively affected.
Considering we just had the largest drop in 10-year treasury rates this week since Covid, it was off-to-the-races for ARKK and high-growth stocks in general.