The Sabrient Blog

The market has gone straight up over the past week since beginning the month of March by breaking through its 50-day moving average. The top and bottom of Sabrient’s SectorCast-ETF rankings look pretty similar to last week, although there has been some shuffling as Energy takes the top spot and Healthcare re-emerges in the top two.

Notably, Consumer Discretionary continues to rise in the rankings at the expense of Information Technology. One might think that they would move in the same direction since they are both cyclical in nature, but the main difference is that InfoTech is more heavily dependent on business spending while Consumer Discretionary (by definition) is tied to consumer spending. In any case, they continue to diverge in our rankings – this time in the opposite direction to how they were scoring last month. Read more…

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I have a special story for you this week about a pair of stocks, but let’s begin with our usual market overview.

The economic news was pretty good last week for a change.  Nothing great, mind you, but we had one of the better employment reports in some time, and only pending home sales were disappointing. The market has reacted positively all week, and today we are in our seventh consecutive up or flat day. These were not wildly positive up-days, just a steady accumulation, but seven days in a row without giving anything back is enough to get our attention.

The Past Week. A look at the Cap/Style market stats beow may give you some warm-and-fuzzies about the economy.  Over the past three months small-cap stocks have performed almost 4 times better than large-caps; over the past month — and the past week — small-caps have doubled the returns of the large-caps. Specifically, Small-cap Growth led last week (+6%), and Large-cap Growth lagged (+3.1%). Read more…

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As I reported last month, January saw relatively limited insider trading in the wake of some year-end net profit-taking in December. So, it was encouraging to see the buyers return during February. Nevertheless, weekly net insider trading transactions (the number of individual buyers minus sellers) still finished February quite negatively, as a lot of insiders appeared to be selling into a resurgent market. Is it indicating some doubt about the sustainability of market strength? Let’s dig a bit deeper into the numbers.

Rather than look at the total dollars traded—which typically runs strongly to the sell side—at Sabrient we prefer to add up the number of unique insider buyers during the week minus the number of insider sellers, as reported to the SEC on Form 4 – open market transactions. In essence, we look at each buyer or seller as casting a “vote” on their company stock, which we have found can be insightful. Read more…

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Well, I’ve been writing in this column that the market has been signaling that it wants to breakout to the upside, and it finally broke back above its 50-day moving average as we began the new month. Sabrient’s SectorCast-ETF rankings are mostly holding steady, with Financials, Energy, Healthcare, and InfoTech still showing the best fundamental valuations.

Even the Outlook score for Consumer Discretionary is slowing creeping up, which further adds to the slightly bullish sentiment reflected by our unbiased, value-oriented, quantitative model. Overall, those sectors that are typically more dependent on economic growth continue to score better in our 1-month forward look than the more defensive sectors like Utilities, Consumer Staples, and Telecom.

The numbers seem to indicate increased corporate spending in advance of improving consumer spending later in the year, which would be quite positive. The increased weakness in the Outlook score for Industrials is perhaps the main cautionary sign. Read more…

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If the bulls had been paying attention to the economic indicators reported last week, you’d assume the market would be down substantially by now.  The fact is, however, that the S&P 500 is just down about -0.4% for the past calendar week, and today it’s up over a full percent. Obviously, the bulls didn’t see the surprising drop in Consumer Confidence, which fell to 46.0 from 56.6 in January, its lowest reading since early last year. Moreover, the lesser known Present Situation Index fell to 19.4, its lowest level in 27 years (which was in February 1983 when it was at 17.5). Read more…

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This post focuses on the issues that the European Union is facing currently. Many of these problems have come to the surface with the mounting fiscal crisis in Greece and more broadly the PIIGS. PIIGS stand for the countries of Portugal, Italy, Ireland, Greece and Spain. The Economist magazine provides some basic facts about each countries debt and what steps have been taken to address the issues at FACTBOX-Eurozone’s embattled fringe PIIGS economies which includes a link to the following chart.

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Read more…

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The market continues to flash signs that it wants to breakout, although mixed news has brought on a consolidation for the first two days of the week. Sabrient’s SectorCast-ETF rankings show little change this week, and this unbiased, value-oriented, quantitative model continues to have a bullish flavor by favoring sectors that are more dependent on economic growth, like Financials, InfoTech and Energy, which remain comfortably above the more defensive sectors like Utilities, Consumer Staples, and Telecom.

However, Consumer Discretionary and Industrials remain relatively weak in the rankings, which tempers the optimism a bit. It appears that corporate spending is increasing in anticipation of consumer spending to improve down the road. Read more…

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There’s a whole lot of flip-flopping going on in the market right now.  Today it went nowhere on no news at all, but if you’d told me the economic indicators for last week were going to report bad-to-not-so-bad numbers and corporate earnings would be split between disappointing and just okay, I would have said that the market would tank.

But no . . .  last week the market reacted like Popeye with a can of spinach. It flexed its muscles and roared ahead, finishing up the second consecutive positive week in a row. The S&P 500 moved toward its high of six weeks ago, falling about 3% short.

After today’s lackluster performance, perhaps the market is pausing for breath while it awaits the important economic releases on tap for this week. Read more…

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The market is flashing signs that it might want to breakout to the upside, and Sabrient’s SectorCast-ETF model seems to be projecting that it just might do it. This unbiased, value-oriented, quantitative model continues to favor sectors that are more dependent on economic growth, like Financials, InfoTech and Energy, which remain comfortably above the more defensive sectors like Utilities, Consumer Staples, and Telecom.

Nevertheless, Consumer Discretionary and Industrials continue to lag in the rankings, and given the tenuous state of the U.S. and global economies, an absolute return approach (as opposed to a directional bet) is still warranted. Read more…

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It worked .  .  . last week the market reversed Monday Mania, starting the week with a down day and ending in a bullish mood.

Business, rather than the consumer, seems to be driving the economy forward, as evidenced by the performance of the sectors that are the backbone of the business side of the economy:  Energy, Materials, Financials, and Information Technology. (Consumer Discretionary, Consumer Staples, Healthcare, and Utilities represent to a greater degree the consumer side of the economy.)

It is the resurgence in business and industry to which the market seems to be responding. Read more…

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