What The Market Wants: Summer Continues To Wind Down

Last week went very much as expected with the S&P 500 inching along again: It was slightly down Monday and Tuesday and then slightly up each of the last three days to end the week up +1.00%.

The economic releases for the most part were at or slightly above expectations. Retail sales were outstanding, up +0.8% versus an expected gain of only +0.2%. Both Producer and Consumer Price Indexes showed a continued lack of inflationary pressure. The release we considered most important was Industrial Production, up a robust +0.6% from only +0.1% last month. Empire Manufacturing and the Philly Fed manufacturing reports were a little below expectations. However, Housing Permits showed strong growth, and a better-than-expected Consumer Sentiment report, along with solid LEI, continued to bump the market forward.

Neither the Fed nor the European Central Bank proclaimed any great solutions to the various world crises, although Monday’s pre-market futures were up on “solid rumors” (isn’t that phrase an oxymoron?). Anyway, the rumors proved to be less than solid, and the market opened slightly down. The S&P 500 has inched back to nearly even.

Market Stats. One interesting note is that small-caps got some attention again with Small-cap Growth, up +2.26%, leading the style/caps for the week. Reflecting this performance, two of our stock picks this week are small-caps. The only losers of the week from sectors or style/caps were Basic Materials, Utilities, and Telecom. Also, since Consumer Cyclicals have been particularly strong, we included two from that sector.

We wouldn’t expect much this week unless rumor does become fact. We get to look at the likely tepid minutes of the FOMC meeting today; Existing Home Sales are on Wednesday; New Home Sales are on Thursday along with Initial Jobless Claims; and then of some greater interest, on Friday, we get Durable Goods, expected to be up +0.6% compared to being down -1.4% last month. Happy trading, if you can find anyone to trade with!

4 Stock Ideas for this Market
This week, I created a custom search in MyStockFinder, with an emphasis on growth at a reasonable price (GARP). Here are four you may find interesting:

Standard Motor Products, Inc. (SMP)—Cyclical Consumer

DXP Enterprises, Inc. (DXPE) — Industrials

Oil States International, Inc. (OIS)—Energy

Tenneco, Inc. (TEN)—Cyclical Consumer

Full disclosure: The author does not hold positions in any of the stocks mentioned in this article.