I'm glad we're past the big election... Because after all the fear and uncertainty leading up to it, we can look forward to more stock market gains.
The Recent Market Rally Has Broadened Out
By Marc Chaikin, founder, Chaikin Analytics
I'm glad we're past the big election... Because after all the fear and uncertainty leading up to it, we can look forward to more stock market gains. As I said last week, we're past that "national distraction." To be clear, my "bullish" view on stocks isn't based on the election outcome. It's what history tells us... The folks at Bespoke Investment crunched the numbers. They looked at stocks' performance from Election Day to Inauguration Day – for every election since 1936. Over that time, the S&P 500 Index averaged a 1.5% gain. And it delivered a positive return roughly three-quarters of the time. Notably, the numbers don't change much based on which party won the election. The average gain was 1.6% when a Republican candidate won. And it came in at 1.4% after a Democrat won. I know that folks love to get excited about politics. But it's important to keep some perspective. That's why I stay focused on historical numbers – like the ones I just shared. And I've been warning folks about getting too caught up in all the political narratives and fear mongering in the media...
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Regular readers will likely recall what I said back in February... You can't just focus on the horse race. Sure, some find it entertaining. But it's a national distraction. The simple reality is that there's a real opportunity forming in the market right now. Some investors will see it, understand it, and act on it. Others will fall to the national distraction. My point was simple... You could miss out on some big profits if you get too caught up in the political drama. History tells us that the stock market does great in election years. The average gain in all preelection years – over nearly 100 years – is 17%. That's almost double the annual average. In fact, 2024 is still shaping up to be better than the average election year. The S&P 500 is up about 24% since the start of the year. Meanwhile, the outlook recently improved for small-cap stocks... In the Power Gauge, we use the iShares Russell 2000 Fund (IWM) to gauge the health of small caps. And earlier this month, our system flipped from "neutral" to "bullish" on IWM. The fund had previously spent just about all of October and the first week of November in "neutral" territory. Meanwhile, the Power Gauge gives 588 of IWM's holdings a "bullish" or better rating. And 368 stocks in IWM have a "bearish" or worse rating. Put simply, our system sees far more stocks with upside potential than downside potential in IWM. That's great news... For one, it means that small caps are likely to deliver more gains in the coming months. Keep in mind that small caps have been underperforming large-cap stocks for a long time. Over the past two years, the S&P 500 is up nearly 50% versus a roughly 26% gain for IWM. In other words, we're likely to see some major gains in small caps as they catch up to their larger counterparts. Of course, we'll see plenty of volatility as well. Stocks don't go up in a straight line over time. But the larger point is that the recent rally has broadened out. And as I said, with election uncertainty behind us, make sure you stay focused on the market. Good investing, Marc Chaikin
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.31%
9
16
5
S&P 500
+0.37%
134
279
83
Nasdaq
+0.7%
27
59
14
Small Caps
+0.77%
588
958
368
Bonds
+0.51%
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain somewhat Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Utilities
+2.5%
Energy
+1.71%
Real Estate
+1.3%
Staples
0.0%
Financial
-0.14%
Discretionary
-0.44%
Communication
-0.45%
Materials
-0.83%
Information Technology
-2.04%
Industrials
-2.24%
Health Care
-4.08%
* * * *
Industry Focus
Regional Banking Services
102
40
0
Over the past 6 months, the Regional Banking subsector (KRE) has outperformed the S&P 500 by +18.15%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #1 of 21 subsectors and has moved up 1 slot over the past week.
Top Stocks
OSBC
Old Second Bancorp,
CASH
Pathward Financial,
AMAL
Amalgamated Financia
* * * *
Top Movers
Gainers
SMCI
+31.24%
VST
+5.61%
NVDA
+4.84%
GEV
+4.5%
UAL
+4.29%
Losers
INCY
-8.33%
MRNA
-5.62%
INTU
-5.1%
J
-4.87%
LOW
-4.6%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
TGT
CSCO, NVDA
TJX
PANW
No earnings reporting today.
Earnings Surprises
WMT Walmart Inc.
Q3
$0.58
Beat by $0.05
KEYS Keysight Technologies, Inc.
Q4
$1.65
Beat by $0.08
LOW Lowe's Companies, Inc.
Q3
$2.89
Beat by $0.08
MDT Medtronic plc
Q2
$1.26
Beat by $0.01
J Jacobs Solutions Inc.
Q4
$1.37
Met estimate
* * * *
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