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Welcome to the first issue of the Dick Davis Investment of the Week. To start things off today, I’d like to focus on an aspect of investing that I find particularly interesting, and that editing the Dick Davis Digests gives me a bit of an advantage in observing: trends. If you...

The upward trajectory for growth stocks that was smooth sailing in November has turned far bumpier in December.

As we move forward we’ll look to focus capital on companies with both solid growth profiles and encouraging price charts. One without the other hasn’t been working (and in fact many of these stocks are trending down), so there’s not much incentive to hold underperformers and hope for a quick turnaround.

he iShares EM Fund (EEM) has dropped decisively below its 25- and 50-day moving averages, which returns the Emerging Markets Timer to a negative reading. We take the Timer’s advice seriously, so we are shifting a couple of stocks to Hold ratings, but because the damage to the portfolio thus far has been minimal, we don’t have any sells tonight.

The stock market’s advance slowed a little this week, but the major indexes are still at all-time highs. Strangely enough, after declining for most of September, utilities have been one of the best-performing sectors over the past five days. Technology and real estate are also outperforming.

The broad market remains strong, while the cannabis sector remains stuck in the mud—in general.

Small caps and growth stocks continue to look better for the third consecutive week. This is a welcome trend given that the beginning of May was pretty tough.

The stocks in are our portfolio are gradually looking healthier, as bargain hunters invest more carefully, focusing on the stocks with the best prospects for real revenue growth and real earnings.

Emerging and global markets struggled this week as our Emerging Market Timer remained negative, with the EEM clearly trading below its 20-day and 50-day moving averages.

The stock market rally is now more than two months old. The S&P 500 has rallied 35% since March 23 and is now just about 10% below the all-time high.

The following is a brief unscheduled update—not only on developments in the marijuana investing sector but also on my thinking about the investment prospects in the industry going forward. I hope you find it useful.

Market volatility has picked up. Stocks are popping and dropping all over the place. In other words, welcome to the thick of earnings season.

The market is still serving up its fair share of surprises, both to the upside and to the downside. We’ve experienced a few of both in our portfolio, and over the last two weeks, we’ve stepped aside from three stocks (my rationale was detailed in the Special Bulletins). This week, two of our stocks reported, and I moved one to Sell.

There is this widely held belief that January is a great month for investors. But I always throw cold water on this claim because the fact is, over the past 25 years, it’s been one of the worst months for stocks.

In a person, company, country, or stock, resiliency matters. For example, with disruptions related to the pandemic and supply-chain chaos all around us, some will navigate better than others. U.S. stocks have been rising despite coping with the effects of inflation, a slowing Chinese economy and supply-chain disruptions on the technology industry. Stocks have gained in recent days on strong earnings reports. Labor shortages, higher prices for raw materials and supply-chain issues haven’t substantially impacted profits.

We had a one year old in 2013 and took a trip to Nevis, an island in the West Indies where my grandfather had retired in the 1980s.

Small caps are off ever so slightly over the last five sessions, though yesterday’s CPI data and Jerome Powell’s press conference/FOMC meeting helped the asset class bounce back from what was a fairly ugly looking four-day slide. The big-picture takeaway here is that the asset class is suffering from the same type of bad breadth malaise that’s keeping a lid on much of the broader market.

The S&P 600 SmallCap Index has dipped about 3% over the last week while yields have gone up.

The chart of the 10-year yield and the small-cap index plotted together makes this inverse relationship (in the very short term) clear as day.

The S&P 600 Small Cap Index rallied back to its March 25 levels early this week following weekend talks between China and the U.S. in Geneva, Switzerland. Those talks led to a 90-day ceasefire in the insane trade war between the two countries.

The latest news on trade is also positive, with supposed progress on talks between the U.S. and India, Korea and the EU. The market is a lot happier now that President Trump appears to be working to generate trade deals rather than destroy them.