The Few Sectors That Will Continue to Gain in This Unpredictable Market

Unpredictable MarketThere is still a solid resilience to the stock market; and it’s based on global monetary stimulus combined with a sprinkling of economic news that institutional investors like.

The willingness that institutional investors have to be buyers is still quite remarkable. But then again, with bond yields creeping up, there really isn’t anywhere else to go. Investors know there’s no reason to keep money in cash.

The pronounced stock market breakout at the beginning of the year has shown very little willingness to experience a meaningful correction and, historically, that bodes well for the rest of the year.

Institutional investors don’t need a lot of motivation to buy in this market, aside from the certainty that things aren’t coming apart.

There is a Wall Street expectation that the bottom half of the year will be stronger economically, and institutional investors are buying this with the continued expectation of quantitative easing going into 2014.

The doom-and-gloomers certainly have some valid points, but they haven’t proved to be profitable in relation to the stock market or gold recently.

The Dow Jones Transportation Average looks to be experiencing a mini head-and-shoulders technical trading pattern, balancing itself out after a run of more than 6,500. There still remains a potential for rising share prices if earnings can be maintained or bettered.

It’s far too early into second-quarter earnings season to draw conclusions. It’s been a mixed bag of overperformance and underperformance.

This stock market continues to be a big hold from my perspective. There’s no particular reason to buy or sell. There continues to be difficulty in precious metal stocks as miners are experiencing much higher costs. I think the gold trade is over for quite a while, as institutional investors continue to avoid the sector.

Oil and natural gas are trading range-bound, but many big oil stocks are holding up well and yields are robust.

I favor dividend-paying blue chips, but I’m not a big advocate of buying this market given the current information.

The shine has come off the utility sector, but there are some worthy buys for new money.

Because of all the monetary manipulation around the world, this is an extremely tough environment for making forecasts. While the case can be made on both the bullish and bearish sides for the stock market, the old rule applies: it typically doesn’t pay to fight the Federal Reserve. Institutional investors have definitely taken this to heart.

The gyrations in the bond and currency markets seem to have settled down and full on corporate earnings will soon be the main catalyst. (See “The Only Way to Protect Your Investments from the Turmoil in China.”)

Wall Street analysts have brought down earnings expectations at many large-cap companies, but this hasn’t affected the resolve of institutional investors.

Sectoral stock market strength is still pronounced in biotechnology and healthcare—pullbacks in what have become the market’s strongest positions have been minimal.

The expectation for a meaningful stock market correction has diminished on the part of institutional investors.

Wall Street is still a direct conduit for Federal Reserve policy. The stock market remains a hold.