The Quant View: A Week of Murk and Fog

Last week brought us murk and fog in an otherwise bright New Year. All style/caps were down for the week, though not drastically. The worst was Small-cap Growth (- 1.12%); the best was Large-cap Growth (-0.6%); and the rest crowded between these uninspiring returns. But given the tremendous amount of cash on the sidelines, the market seems unlikely to turn disastrous.

It could have been worse. Alcoa (NYSE: AA), Monsanto (NYSE:  MON) and Chevron (NYSE: CVX) disappointed badly early in the week, although Intel (Nasdaq: INTC) brought in pleasing numbers later in the week. Government statistics were for the most part dismal -- worse-than-expected numbers for trade balance (-36.4 B), initial job claims (+11,000 to 444,000) and retail sales (-0.3%). Even consumer sentiment was poor (flat, actually, at 72.8 vs. December's final 72.5), probably a reflection of the other disappointing statistics. Only the consumer price index (CPI) was encouraging, increasing just 0.1% in December, after a 0.4% rise in November. Although Europe is beginning to struggle with inflation, the U.S. isn't having that problem yet.

This morning's announcement by Citigroup (NYSE: C) was worse than ugly, but it met expectations and still closed higher. IBM (NYSE: IBM) beat estimates but sold off a bit afterhours. Google (Nasdaq: GOOG) reports on Thursday. It must be the glow of these giants, plus all that money on the sidelines, that has the market doing so well, even as it reflects on last week's mess.  Indeed, the S&P 500 closed at a new 52-week high today, with the Dow and the Nasdaq closing in on theirs. A bit surprising is that all of today's positive activity is in spite of a stronger dollar.  Perhaps part of the market's resilience is due to several major M&A events, highlighted by Tyco's (NYSE: TEL) purchase of Brinks (NYSE: BCO). I guess if you can't rob the truck, just buy it.

Our sector outlook for last week had Healthcare, Consumer Staples, and Utilities in the top 5, and it was close to spot on as those three sectors were three of the only four sectors positive for the week. Materials, as predicted in our January 8th SectorCast, brought up the bottom last week, with Energy and Financials not much better. 

This week, the Sabrient outlook seems best for Telecom, Healthcare and Utilities and worst for Materials, Industrials and Financials. As you can see from the SectorCast table, the Financials sector has fallen to the bottom once again.

Caution remains the word of the day, although the significant cash on the sidelines seems unlikely to let the market slip too much, barring any unforeseen disaster.

Stock ideas are below the tables.

Cap/Style Overview

Current Sector Performance

Best & Worst Industries

The Sabrient SectorCast  

4 Stocks Ideas for this Market

This week, I used the preset GARP search on MyStockFinder (http://MyStockFinder.com), flavoring the search differently by increasing the weighting for growth and giving more emphasis to quality of earnings, long-term technicals, and recent revisions by analysts.  Here are 4 stock ideas from the search:

Amedisys, Inc. (Nasdaq: AMED) - Healthcare

ManTech International Corporation (Nasdaq : MANT) - Information Technology

Companhia Energetica de Minas Gerais (NYSE: CIG) - Utilities

Synaptics Incorporated (Nasdaq: SYNA) - Information Technology

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