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Freedom from Smoke: Zacks NOV Market Strategy

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The following is an excerpt from Zacks Chief Strategist John Blank’s full Nov Market Strategy report To access the full PDF, click here

 

I open this month’s market strategy report with a few insightful charts. Bespoke Investment Group provided us two charts concerning this historic U.S. election. Our thanks go out to them.

First of all, since 1900, there’s never been a session of Congress with a Democratic President, a Republican Senate, and a Democratic House.

This is uncharted political territory, likely with hidden benefits.

The U.S. stock markets recognized that, straight away.

 

 

Second of all, U.S. election vote counts suggest that this U.S. election had the largest voter turnout in over 100 years, at 67%.

That’s truly laudable voter engagement.

 

 

The record turnout for this critical U.S. Presidential election should be cause for praise from overly cynical observers.

Voter participation hasn’t been this high since 1900.

Zacks November Sector/Industry/Company Telescope

Zacks Industry Ranks show us what happens when an earnings season goes much better than covering analysts expected.

I have five of the 10 S&P 500 sectors at Very Attractive in November.

One internationally exposed sector – Materials – led again. The other – Info Tech – came roaring back. Think Steel, Paper, Semis, Computer Software, and Building Products/Construction Materials.

Consumer Discretionary and the Financial sectors made surprise appearances in the Very Attractive category this month.

Retail sales are staying quite strong. The Banking system is getting less worried about loan losses. Stock values are holding up.

The bottom dweller this month: Energy. But the Drillers are looking good.

Is an oil price bottom truly in here? Are the solar plays overbought? I think so.

What to make of Consumer Staples, Telcos, and Utilities? Passé this month.

(1) Materials stays Very Attractive.

The top industries this month are...

  • Steel,
  • Paper,
  • Building Products/Construction Materials,
  • Metals Non-Ferrous (Gold and Silver miners) and look great again.
     

Top Zacks #2 Rank (BUY) stock: JELDWEN (JELD - Free Report)

(2) Industrials rose to Very Attractive from Attractive.

The top industries this month are...

  • Construction Building-Services,
  • Airlines, and
  • Metal Fabricating were the top industries.


Top Zacks #1 Rank (STRONG BUY) stock: Lennar (LEN - Free Report)

(3) Info Tech rose to Very Attractive from Unattractive.

The top industries this month are...

  • Misc. Tech,
  • the Semis, and
  • Computer Software-Services are HOT.
  • Electronics looks good too.


Top Zacks #1 Rank (STRONG BUY) stock: Jabil (JBL - Free Report)

(4) Consumer Discretionary
rose to Very Attractive from Market Weight.

  • Apparel,
  • Other Cons. Disc. and
  • Home Furnishing-Appliances lead.
  • Autos/Tires/Trucks solid.


(5) Financials surprisingly, rose to Very Attractive from Unattractive.

  • Investment Funds are best, but
  • Banks & Thrifts and
  • Investment Banking look good too. Loan loss provisioning has fallen. That is likely a big factor.


(6) Health Care stayed modestly Attractive. Medical Products led. All groups solid.

(7) Consumer Staples fell back to Market Weight from Attractive. Consumer Product-Misc. Staples, & Agribusiness are the two most attractive industries.

(8) Communications Services fell to Market Weight from Very Attractive. Utility-Telephone was a strong spot.

(9) Utilities stay at Market Weight.

(10) Energy fell to Unattractive from Market Weight. Oil & Gas Drilling is the exception.

Conclusion

As to my title this month?

Freedom from Smoke…

Cynicism is a striking school of thought in ancient Greek philosophy, practiced by the Cynics.

Cynicism claimed to offer people the possibility of happiness and freedom from suffering in an age of uncertainty.

For the Cynics, the purpose of life is to live in virtue, in agreement with nature.

The goal of life is eudaimonia (or human flourishing) and mental clarity or lucidity.

Lucidity is literally "freedom from smoke” which signified false belief, mindlessness, folly and conceit.

I think that’s why – stock markets rallied so hard and fast – after the November 3rd U.S. Presidential election.

Happy Trading and Investing!

Regards,

John Blank

 

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