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With the market falling like a stone today, it’s tempting to conclude that a bottom is near. But the fact is that identifying bottoms is very difficult to do in real time, so the prudent course is to reduce risk, which we do this week by selling three more stocks.



As for the new recommendation, energy stocks have been a pocket of strength, so energy it is!

It’s time for all investors to obsess about the Fed again. The Central Bank has its March meeting this week and Wall Street is on pins and needles waiting to hear what they might vaguely insinuate.

It was a great first quarter. The S&P closed out March up 10% YTD. The index also rallied an impressive 28% from late October through the first quarter. Is there more upside ahead?

Things have been good. The Fed reiterated its intention to lower the Fed Funds rate three times this year at the March meeting. Meanwhile, inflation is way down and the economy is solid. Manufacturing data was much better than expected and the Fed raised its GDP forecast for 2024 from 1.4% to 2.4%.

This has been a very positive month so far in the market. Will the rally continue?

After three straight down months for the S&P 500 where the index dipped into correction territory (down 10% from the high), the index has turned around and is up over 5% so far in November. The catalyst is the perception that interest rates have peaked.

What a difference a week can make. Just one week ago, the market was reeling. The S&P 500 concluded the third straight month of declines after falling into correction territory a few days earlier. But then stocks turned around and had the best week of the year with the S&P 500 rallying nearly 6% for the week.

The market is rallying this month as the “Goldilocks” scenario gets renewed traction.

The economy is still solid. There are no signs of recession. At the same time, the Fed is making noises like it may be done hiking rates because of the higher longer-term rates. A good earnings season may also buoy stocks.

I think there are some really good reasons to own individual stocks. Owning stocks is real, it gives you a chance to test yourself.

If you’ve been reading our Wealth Advisories for a while, you probably know that I’m big on maxims.

This is the week the market began to think bad economic news might just be bad for stocks, even if it’s “good” in the eyes of the Fed.

Good economic news continues to be interpreted as bad for stocks because it suggests the Fed has “more work to do.”

A very promising start to the trading week, which saw the indexes surge higher by 5%, was somewhat washed away by Friday’s post Jobs Report sell-off. And while the steep declines Friday were worrisome, big picture the S&P 500 still managed to gain 1.5% on the week, the Dow rallied 2%, and the Nasdaq added 0.7%.

Trends are up, but overextended, suggesting that a normal correction is likely. Our Hi-Lo Alert, which measures the number of Dow stocks above their medium-term moving averages, is at its highest point since May, just two weeks before the market got very rocky and embarked on the course that took it down to the August low.

My stock idea today takes its cue from water. Good old H2O. Water is a daily requirement of all living things, and the earth has a limited supply. So as the world’s population increases, proper management of water resources becomes increasingly critical. And where are both the population and the use of water increasing especially fast? China. So my idea today is a very young stock, which came public on June 24 and just earned a spot in Cabot Top Ten Report.

As I’ve written in recent weeks, there are ample signs that the market’s bear phase is close to (or has already reached) its end point. I won’t rehash all the signs here (double-bottom in the indexes, new lows divergence, Bear Stearns bad news, etc.). Instead, I want to take a few paragraphs to dispel a common belief among most investors-that you must get in as quickly as possible to make big money in a bull market.

In my mind, the future is likely to bring something new to America, and for lack of a better term, I’m going to call it the Great Shrinkage. In this Great Shrinkage, as I ventured before, credit will shrink and equity will increase. In this Great Shrinkage, the number of colleges will shrink, as fewer parents choose to borrow the big bucks required. States and municipalities will cut non-essential services. Savings rates will climb ... but with demand so high, returns from savings will stay extremely low.

The undercurrents we felt in the market last week bubbled to the surface this week as value-oriented sectors opened a modest performance gap as compared to growth-oriented sectors.

Don’t ever forget about the dividends. A couple months ago we were spiraling into a recession and bear market. Now, things look good. There’s a reason that dividends have accounted for 44% of market returns over the last hundred years.

Things could actually be turning optimistic for the market and it’s looking like this could be more than just a bounce back from the overdone December lows. There is still risk out there. But a catalyst may be emerging for strong upside with increasing optimism for a U.S./China trade deal. My market prognosis is changing from pessimistic to good with a chance of great.

With most of our companies having now reported we are turning our attention back to the longer-term future. For the most part, earnings from our companies were good and we’ve only made a few incremental ratings changes here and there.