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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.

Given that view, how do we invest with the potential for a stutter-step in November? Well, one place to start is with the 10 S&P macro sectors. Currently, the S&P 500 is trading at 16.4x this year's bottom-up operating earnings estimate. Looking at the P/E ratios of the 10 macro sectors shows that only the financials (13.4x), energy (13.8x), and utilities (16.1x) are trading at a discount to the S&P 500. On the energy theme, only three stocks in Raymond James' research universe have a Strong Buy rating from our fundamental analysts, and screen bullishly using my proprietary models: Enterprise Products Partners (NYSE:EPD), Memorial Production Partners (NASDAQ:MEMP), and Valero Energy (NYSE:VLO).

Raymond James covers many Strong Buy-rated names in the financials complex, and these seven also screen well by my system: EverBank Financial (NYSE:EVER), Huntington Bancshares (NASDAQ:HBAN), Lakeland Financial (NASDAQ:LKFN), New York Community Bancorp (NYSE:NYCB), PrivateBancorp (NASDAQ:PVTB), Webster Financial (NYSE:WBS), and Wintrust Financial (NASDAQ:WTFC). would put these names on your watch list for potential purchase.

The call for this week: Last week just about all of the indices I monitor made new all-time highs except for the Dow and the Nasdaq (INDEXNASDAQ:.IXIC). Likewise, seven of the S&P's 10 macro sectors made new all-time highs with the exceptions being consumer staples, telecommunications, and utilities. Moreover, despite predictions of imminent disaster for stocks, there is little evidence suggesting a sudden collapse is at hand. Indeed, the Buying Power Index is above its September highs, while the Selling Pressure Index recorded a new low last week, and all of the Advance/Decline Lines I look at rose to new highs. Accordingly, the short-term "buy signal" that occurred on October 10 remains in force. Surprisingly, given last week's strength, the McClellan Oscillator became less overbought. And don't look now, but 63.5% of companies reporting earnings have beaten the estimates and 54.4% have beaten revenue estimates. This morning there are more stories about no tapering by the Fed this year, a stance I have taken since last August. That sense is what buoyed stocks late last week and it is having the same effect this morning.
No positions in stocks mentioned.
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