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US Markets: 10 Stocks to Consider Ahead of Possible Stumble in November


For now, all indicators say the bull move could extend a lot longer than people think.


Indeed, one gets a different perspective when things are viewed from high places. The Starship Enterprise sought "to boldly go where no man has gone before," and last week the stock market boldly went where it has seldom gone before. Indeed, last week I referenced the fact that all 10 of the S&P (INDEXSP:.INX) macro sectors were overbought, and overbought by more than two standard deviations above their respective 50-day moving averages (DMAs). The invaluable Bespoke organization writes the following:

It is not too common for even one sector to trade two standard deviations above its 50-DMA (45% of all trading days), but to have the S&P 500 and all 10 sectors trading at these levels simultaneously is practically unheard of. This event is so rare in fact, that going back to 1990, there have only been two other days where we have seen similar readings! . . . [The] first occurrence came in the aftermath of the first Gulf War on 2/11/91. The second occurrence came on 12/29/03 in the early stages of the prior bull market. Back then, there was no major catalyst driving the rally besides some stronger than expected economic data and the typical seasonal strength that is common towards the end of the year. Leading up to the 2/11/91 occurrence, the S&P 500 rallied 17% in just four weeks. However, even after that rally, equities did not see any meaningful pullback over the following year. While the momentum slowed, over the next year the S&P 500 never traded more than 2% below the closing level from 2/11/91.

If that is the way it is going to play this time, it implies this "bull move" could extend a lot longer than most think. In past reports I have commented that many pundits have suggested this "bull" is long of tooth at 56 months. And, measuring from the March 2009 nominal price low, that would be true. But, just like the Dow Jones Industrial Average (INDEXDJX:.DJI) made its nominal price low at 577 in December of 1974, it did not make its valuation low until August of 1982; and most market observers measure the beginning of the 1982 to 2000 secular bull market from that August 1982 valuation low. Fast-forward, I believe the 12-year trading range market (similarly to the 1966-1982 trading range market) made its valuation low in March of 2009. However, as repeatedly stated, I think the valuation low occurred with the "undercut" low of October 4, 2011, which was identified in my articles. Measuring from there shows we are only 24 months into this "bull."

While it's true my timing models, which targeted late summer as a window of vulnerability (even though we didn't get the 10% pullback I was looking for), are now calling for another downside window from mid-November into early December, I would expect any hesitation to be similar to what we got last summer.
No positions in stocks mentioned.
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