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In this week’s Stock Market Video, Mike Cintolo takes some extra time to talk about his trend-following indicators, where they stand now, and when new buy signals could show up.

Wall Street has decided that interest rates have peaked. And the market loves it. The S&P 500 is up 8.4% so far this month and has made up most of the decline of the prior three months.

Yesterday’s sharp selloff turned Cabot’s intermediate-term market timing indicators negative, so it’s time to get a little more conservative.

Donald Trump was elected President last Tuesday, and the market posted the best week of the year. The S&P 500 soared about 5% in the three days following the election.

Investors perceive his election will deliver stronger economic growth, primarily through deregulation and tax cuts. Although interest rates spiked higher on the expectation of a stronger economy, the market views the revised prognosis as overwhelmingly bullish, so far.

It’s all about the election right now.

The massive political event is sucking all the oxygen away from everything else. It’s worth noting that the Fed will meet and likely cut the Fed Funds rate this week. That will be the focus after the election is resolved, if it’s resolved.

I don’t get into the business of predicting political outcomes. That’s not my horserace. As of now, the markets seem to be leaning toward a Trump victory. That appears to be the more likely bet. But all that stuff favored Hillary even more so in 2016. We’ll see what happens.

And we were having such a good time. Stocks were killing it in November after the election. But December turned out to be a real stinker.

Sure, the S&P 500 is only down about 1% over the past month. But that’s only because the big tech companies are still doing okay. The rest of the market is getting slapped around. Eight of the eleven S&P sectors are down in December. And many individual stocks are having a terrible month.

The market is wrapping up another good month and quarter. The S&P posted strong gains in September, after three straight winning weeks in a row, following a rough first week. The index is also up nicely for the third quarter and near the all-time high with a better than 20% gain year-to-date.

The latest upward leg is being driven by cooling inflation, falling interest rates, and a still-resilient economy. We’re getting the rate cuts without the economic pain and an expected soft landing. What’s not to like?

As an investor, you can’t afford to ignore small-cap stocks. Here are five reasons to buy them - and two small-cap ETFs to consider.

Last month, I made the decision to short bitcoin. Turns out, this bitcoin options trade was one of my best investment decisions of the past year.

Apple (AAPL) has a good earnings report and a stock moves from Hold to Strong Buy.

Averaging in the stock market is when investors gradually increase the number of shares they have over time, in their best stocks.

Current Market Outlook


The market remains in great shape with all the major indexes in gear on the upside, a ton of stocks and sectors acting well and a general lack of selling pressure even after the recent run. Surprisingly, we’re still seeing hesitation among investors in terms of money flows, which, from a contrary point of view, is bullish. The next big test for the market and (especially) individual stocks is earnings season—how leading stocks respond (both those that have been running for a while, and new leaders that emerged in September) will have a big say on the market’s short-term future. But given the overall evidence, the odds continue to favor higher prices down the road, so any reasonable dips should be viewed as buying opportunities.

This week’s list is another good-looking mix of growth and industrial stocks with strong charts. Our Top Pick is Adient (ADNT), which owns about one-third of the car seat market and has big earnings, a cheap valuation and a tidy pullback after a powerful September breakout. Keep new positions small ahead of earnings.

Stock Name	Price	Buy Range	Loss Limit
Adient (ADNT)	0.00	82-85	75-77
Atlassian (TEAM)	182.16	38-40	35.5-37
Baidu (BIDU)	0.00	257-267	236-240
CF Industries (CF)	45.23	35-37	32-33
DXC Technology (DXC)	0.00	88.5-91.5	83-84
LPL Financial Holdings (LPLA)	85.22	51-53	47-48.5
Monolithic Power (MPWR)	0.00	109-113	102-104
Sherwin-Williams (SHW)	526.09	370-380	350-355
Thor Industries (THO)	104.76	124-128	114-116
Vishay (VSH)	0.00	20-21	18.5-19

Current Market Outlook


On an intermediate-term basis, the overall market remains stuck in the middle—many areas are still looking ragged, and most major indexes are hanging around their 50-day moving averages. Our screens this weekend did reveal a number of solid five- to six-week setups among growth stocks, as well as lots of solid action in other areas that have recently come to life. If the market gets going from here, there should be plenty of stocks to jump on. We’re not opposed to buying small amounts of a couple of these potential leaders today, but until we see more than just a day or two of rallying, you should play things carefully. We have our Market Monitor at a level 6 (out of 10), and will simply let the market tell us (through its own action) whether the next big move is up or down.

In the meantime, we’re laser-focused on stocks that have either just blasted out of bases or uptrending stocks that have resisted the Nasdaq’s wobbles since early June. Our Top Pick is Medidata Solutions (MDSO), which remains in good shape after lifting from a two-year base in April. Keep positions small.

Stock Name	Price	Buy Range	Loss Limit
Alibaba (BABA)	254.81	138-144	125-130
Align Technology (ALGN)	316.20	145-150	135-137
American Airlines Group Inc. (AAL)	0.00	51-53	46-47.5
Exact Sciences (EXAS)	116.91	35-37	31.5-32.5
First Republic Bank (FRC)	0.00	100.5-103.5	96-96.5
Medidata Solutions (MDSO)	0.00	77-80	71-72
Puma Biotech (PBYI)	0.00	82.5-87	74-76
RingCentral (RNG)	238.73	35.5-37.5	33-34
Tesoro (TSO)	0.00	92-95	87-88
WellCare Health Plans, Inc. (WCG)	271.83	177-181	166-168

The market has been choppy and unpredictable. Optimism about a “soft landing” is being tempered by rising interest rates. Either the strong economy or high interest rates will dominate the market in the months ahead. We’ll see.

But what seems to be quite clear is that the economy is solid for now. Third-quarter GDP is expected to be over 5%. Even if the economy does slow, it will likely take several quarters to slow from here. That means gasoline demand should remain solid. And that should be good news for refiners.

In this issue I highlight one of the best performing large company stocks in the energy sector over the last several years. It is also one of the few plays out there that still has solid momentum, as the stock remains in an uptrend that began three years ago.

Good momentum means high call premiums as more investors are willing to be on higher prices in the future. The refiner stock highlighted in this issue has a great chance of providing the opportunity to sell covered calls in the near future. It should help generate a high income in this uncertain environment.

Current Market Outlook


After a big run last year and a moonshot during January, the sellers have finally come out of the woodwork, pushing the major indexes (and many leading stocks) sharply lower during the past six trading sessions, including a mini-crash today (the Dow was down 1,500 points at one point!). Looking at the evidence, the bull market (longer-term trend) is still intact, but the intermediate-term trend has turned negative and many leading stocks have come unglued. In the near-term, we certainly wouldn’t be shocked to see a snap back, but following a major extreme in price and sentiment two weeks ago and this abnormal selling, stocks probably need some time to wear out the weak hands and digest their recent gains. We’re moving our Market Monitor down to neutral to respect the change in the evidence—we don’t advise selling wholesale here, but you should honor your stops and loss limits, and on the buy side, be very choosy and keep new positions small until the market finds support.

This week’s list is a potpourri of stocks and sectors, most of which have recently reacted well to earnings. Our Top Pick is Pure Storage (PSTG), a fast-growing outfit that emerged from a base on big volume last month.

Stock Name	Price	Buy Range	Loss Limit
Autohome (ATHM)	98.65	73-77	67-69
BofI Holding (BOFI)	42.93	33-35	30-31.5
Harris Corp. (HRS)	198.60	145-150	137-139
Knight-Swift Transportation Holdings Inc. (KNX)	40.61	46-48.5	42.5-44
LPL Financial Holdings (LPLA)	85.22	59-62	56-57.5
MercadoLibre, Inc. (MELI)	980.83	340-360	310-320
Meritor (MTOR)	21.46	27-28.5	25-25.5
MyoKardia (MYOK)	108.56	47-51	42-44
Pure Storage (PSTG)	25.64	18.5-19.5	17-17.5
Shutterfly (SFLY)	94.71	68-72	59-63

There are three big developments in the cannabis space to report.

* A buyout of one of our portfolio names, which nets us 105% gains in four months.

* A confirmation that the Biden administration is serious about some major cannabis reform, which would be a huge catalyst for the group.

* A buyable selloff. Cannabis stocks sold off sharply Tuesday probably based on false fears that rescheduling won’t happen. I think that’s wrong, and the weakness is a buy.

Oil billionaire T. Boone Pickens recently dropped a campaign to push for the adoption of wind power on a large scale because he’s in the process of building the word’s largest wind farm in the Taxes panhandle. When the oil barons start going Green, you’d better take notice. Today I’m going to evaluate some stocks that might benefit from this endeavor.