Records across the board!
Last week, I saw evidence of panic buying, and there was more of that on Thursday. It’s not a bad thing unless you are so cool that you sit it out (waiting for the pullback), but it does make it harder to find value.
With records across the board in all the major indices, many are looking to the Russell 2000 Index for value. Although it outperformed the Dow, the S&P 500, and NASDAQ, it still has trailed those larger indices over the last 52 weeks.
The Russell 2000 Index is often considered the best proxy for the domestic economy. While it’s true that there are fewer multinationals, it’s also dominated by smaller biotech names that aren’t reflective of the economy. That being said, there are some stocks in hot industries with a ton of upside potential.
Right now, the hottest area for the market is SPDR FD Energy (XLE), where crude oil continues to take off from a combination of dramatic decline in inventories, disciplined U.S. rig count and production, and a stronger global economy.
S&P 500 Index
Consumer Discretionary (XLY)
Consumer Staples (XLP)
Health Care (XLV)
With West Texas Intermediate (WTI) breaking through the $62.00 resistance point, there isn’t a lot of technical resistance up to $80.00.
There are large-cap names along with Permian Basin (PBT) names that I’ve mentioned on my show and other Fox News and Business programs (you should already be long). There are additional small-cap names in the industry, including Carbo Ceramics (CRR). It’s a higher-than-average risk idea, and I like it a lot.
In addition, industrial names remain super-hot as well, including United Rentals (URI), a stock I’ve pounded the table on and had the CEO on my show as a guest. Airlines are also driving industrial names higher, getting a boost on strong earnings results from Delta Airlines (DAL) yesterday.
Also, heavy construction stocks scored big time on Thursday in part to positive vibes coming out of Washington on the wall and infrastructure. The fact is that there is enough growing demand to keep names such as Granite Construction (GVA) moving higher.
Material names keep rocking with agricultural chemical names in the midst of a stealth breakout. CF Industries (CF) and others still look inexpensive to me at current levels, considering their global economic growth.
Last year, home buyers were among the biggest winners in the consumer discretionary sector, and that momentum has carried over into 2018. KB Home (KBH) posted a huge beat on revenue and earnings.
Financials have been the hottest sector in the past week with all eyes on earnings after the open this morning:
- PNC Financial (PNC)
- BlackRock (BLK)
- Wells Fargo (WFC)
- JPMorgan Chase & Co (JPM)
Facebook is weighing down technology big time with its announcement on changes to its methodology and ranking system. I’m trying to understand it before making a knee-jerk decision, but lots of folks are selling at the open and might ask questions later. I’m sure the stock is a buy on this dip, however.
Blue chips are opening higher, but early oomph has faded a little as the street also grapples with earnings from the banks. Speaking of banks, they all beat, but this must be dissected like a frog in a 10th grade lab class, because these banks have a lot of ways to mask mediocrity.