Is This Breakout for Real?

Stocks spent six straight sessions under the 100 day moving average. That sad stretch ended Wednesday with a break above.

However, is a close at 2144 truly a breakout when the resistance level is at 2142?

Maybe...maybe not. Thus, it will take a bit more time to show whether this is a breakout or fake out.

The most valuable thing to point out from Wednesday's action is that the GDP Now Q3 estimate ticked higher to +2.0% after the Housing Starts report. That is the first upward movement for this estimate in a while. However, at this stage there are not many more inputs into the Q3 model. Meaning this cake is nearly fully baked.

2% growth represents a nice increase from the past two quarters. However, what is even more interesting to note is that the Blue Chip consensus of economists/strategists stands with a +2.7% estimate. Meaning things might be even more robust.

It's hard to be bearish when facing these facts. Which says to keep concentrating your investments in the stock market to find superior returns.

However, not everyone wants to focus on the small and mid-caps that dominate the Zacks #1 Rank list. Instead they prefer the comfort of larger stocks given that they are less prone to the volatility we have endured this past year. The downside is how hard it is to beat the market riding these elephants...until now.

If you want to outperform the market with large cap stocks, then our newest portfolio is the right one for you.

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Best,

Steve Reitmeister

Executive Vice President, Zacks Investment Research

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