On only five occasions over this period has the S&P 500 given up more than 2 percent of its value in the final month and a half of the year. We’re not inclined to fight that seasonal record. Looking ahead to 2018, 65 weeks have passed since the S&P 500 last endured a correction of 2 percent or more. We’d be surprised if stocks don’t break this historic winning streak at some point in the first quarter of 2018.
Utilities and regulators in many states have reached a consensus that coal is yesterday’s fuel. Operators will keep these power plants running as long as they remain economic, but NextEra Energy’s decision to close the St. John’s River facility suggests that their time may be short.
Global growth trades will prove to be the winners in this last phase of the bull market. But success with them will require accuracy and agility. Outperformance will favor strong stock pickers, as investment correlations that favored passive investment strategies break down while the bull market nears its end. Emerging markets should continue to outperform for the rest of the year.
An in-depth rundown of our outlook for oil prices appears in Value Play Earns Higher Buy Target from the most recent issue of Capitalist Times Premium. For those who don't subscribe, here is a breakdown from the summer that appeared in our sister publication Energy & Income Advisor.
The Trump administration has clearly gone all-in on turning the supposed war on coal into a war for coal, but the outcome will depend on electric utilities and power companies. We'll focus on the risks and opportunities associated with government intervention when we attend the Edison Electric Institute's financial conference in November.
Narrowing market leadership since April made us wonder whether the market could be due for a pullback. While a relatively small number of stocks powered the index to new highs, many small- and mid-capitalization names lagged over this period. As recently as mid-August, for example, fewer than 50 percent of the names listed on the NYSE traded above their 200-day moving average. Today, almost two-thirds of NYSE-listed stocks are in an uptrend, the highest proportion since April.
At the end of the day, cryptocurrencies are all about the technology and science involved, which needs to be respected. But when it comes to bitcoin, people will realize that there are few people who actually spend them, meaning it won’t become the payment system its creator envisaged.
Our bullish outlook for the energy and financial sectors support higher buy targets for three of our Wealth Builders. We also swap our lone consumer-discretionary position for a name that offers a better risk-reward proposition.
The break-neck volatility of the past few years and the likelihood of shorter cycles in the energy sector argue for diversification into secular growth stories that depend less on commodity prices and timing your entry and exit points.
DISCLAIMER: Capitalist Times, LLC is a publisher of financial news and opinions and NOT a securities broker/dealer or an investment advisor. You are responsible for your own investment decisions. All information contained in our newsletters or on our website(s) should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence and consider obtaining professional advice before making any investment decision. As a condition to accessing Capitalist Times materials and websites, you agree to our Terms and Conditions of Use, available here including without limitation all disclaimers of warranties and limitations on liability contained therein. Owners, employees and writers may hold positions in the securities that are discussed in our newsletters or on our website.