After a Rapid Recovery, Stock Selection is Very Important

Excerpt from Louis Navellier's Marketmail - 3/19/2019

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The S&P 500 has now risen 20% since its Christmas Eve low and the VIX (volatility index) is now at its lowest level since early October, when the stock market peaked, and ETF arbitrage spun out of control. 

The Wall Street Journal had an interesting article last week entitled, “Riskier Stocks Are Paying Off.” The article concluded that companies with weaker earnings are outperforming those with steadier profits. If you have any questions about your stocks, I urge you to use my Dividend Grader and Stock Grader databases, which are not experiencing the same issue, probably because my Quantitative grade measures include persistent institutional buying pressure, which sometimes transcends the traditional fundamentals. The bottom line is that the fundamentals are working, especially for stocks with high Quantitative grades.

Our friends at Bespoke Investment Group also pointed out that the smallest stocks in the S&P 500, based on market capitalization, continue to substantially outperform the overall S&P 500. This bottom 10% (50 stocks) is more domestic-oriented, less adversely impacted by a strong U.S. dollar that continues to negatively impact large multinational companies that are being hurt by a global economic slowdown.

In This Issue of Marketmail (Click Here to Read)

With the market rising again, our authors take a Spring Break with some valuable market tutorials. Bryan Perry looks at rising second-half 2019 earnings forecasts and a 5-point checklist on why the market seems so optimistic. Gary Alexander hearkens back to the roots of our crippling federal entitlement programs and the first war between the Fed and the President in the 1960s. Ivan Martchev addresses common myths about QE and the “excess reserves” vs. inflation and “printing money,” while Jason Bodner expands on his 30-year long-term indicator for overbought vs. oversold markets, using red, green, and yellow bands. Then, I’ll return to present-day events with an analysis of Brexit and the latest U.S. economic indicators.

Income Mail: Earnings Pendulum Expected to Swing Higher 

     By Bryan Perry

Making a Second-Half Global Rebound Checklist

Growth Mail: When Presidents and Fed Chairs REALLY Went to War

     By Gary Alexander

“How Are We Ever Going to SPEND All This Money?”

Global Mail: The Mystery of the Credit Multiplier

     By Ivan Martchev

How the Fed Increases Liquidity Without Fueling Inflation

Sector Spotlight: The S&P 500 in 2019 is Like a 20-to-1 Longshot that Paid Off

     By Jason Bodner

What the Red, Green, and Yellow Bands Tell Us

A Look Ahead: 10 Days Until Brexit Explodes into “No Deal” No Man’s Land

     By Louis Navellier

Fed Chairman Powell Has Learned to “Watch His Language”