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The New Normal - Stock Picker's Market?

America’s economy witnessed one of the worst quarter since 2008. U.S. first-quarter GDP from January to March 2020 turns negative falling at a 4.8% annualized rate due to the coronavirus and the subsequent lock-down. This was the first contraction since the first quarter of 2014, and the worst decline since the fourth quarter of 2008. Federal Reserve leaves interest rates the same at near-zero but will deploy a full range of tools to rescue the US economy.


With the coronavirus pandemic extending through the year and beyond there will be long-term structural changes to the U.S. and global economies as Main Street as well Wall Street will need to adapt to this new normal. The question remains - once the pandemic abates and business reopens what will the recovery look like.


Many would love to see a “V’ shaped recovery as the lockdown comes to an end and the recovery gains traction. Because the stock market is a leading indicator of business cycles, it may already be discounting this market scenario. However, the recovery may very well begin as a “V”, but because of the structural damages incurred to the U.S. and the global economy, the current leg of the rising “V” may soon level off and the slope turns toward a “U” for many industries and securities, and possibly turn to “W” or even “L” for many others.


As many industries and securities entering into potential U, W, or L recoveries they can begin to collectively weigh down key US stock indexes leading to a “stock picker’s market environment.” Under this market scenario, the common assumption is that for investors and traders to outperform the indexes they may need to be sector and stock selective, focusing on securities with solid long-term growth prospects.


Since passive investing has dramatically outperformed active investing over the past decade or so this has created a situation of an over-reliance on index-based funds and ETFs. Will the Pandemic and an impending recession force investors and traders to rethink one’s investment strategy? There is a distinct possibility that the new normal may be one of selective buying as the pendulum swings toward stock picking.


With the above thoughts in mind, we will begin to periodically update you via our technical screening process (SCTR top-ranked names) to help you identify leadership sectors and securities across the Large-cap, Mid-cap, and Small-cap arenas. Please refer to the 4/7/20 blog - It's All Relative for further information on SCTR ranking.


Large-cap:


NEM (99.9),NLOK (99.7), AMD (99.5), REGN (99.3), MKTX (99.1), NVDA (98.9), MSCI (98.7), AMZN (98.5), PAYC (98.3), NFLX (98.1), LLY (97.9), GILD (97.7), CDNS (97.5), DVA (97.3), HUM (97.1), DGX (96.9), NOW (96.7), CAG (96.5), ADSK (96.3), and QRVO (96.1)


Mid-cap:


MRNA (99.9), TSLA (99.7), SHOP (99.6), DXCM (99.5), RRC (99.4), ZM (99.3), W (99.2), KGC (99.1), EQT (99.0), GOLD (98.9), WPM (98.8), and EXEL (98.7)


Small-cap:


BTAI (99.9), FCEL (99.8), INO (99.8), AGRX (99.7), CCXI (99.7), MRSN (99.6), RCUS (99.6), AXSM (99.5), NH (99.5), NLS (99.4), NVAX (99.4), and CUE (99.3)


Large Cap Stocks Source: Courtesy of StockCharts.com

Mid-cap and Small-cap Stocks Source: Courtesy of StockCharts.com

Large-cap Stocks page 1 Source: Courtesy of StockCharts.com

Large-cap Stocks page 2 Source: Courtesy of StockCharts.com

Large-cap Stocks page 3 Source: Courtesy of StockCharts.com

Large-cap Stocks page 4 Source: Courtesy of StockCharts.com


Mid-cap Stocks page 1 Source: Courtesy of StockCharts.com

Mid-cap Stocks page 2 Source: Courtesy of StockCharts.com



Small-cap Stocks page 1 Source: Courtesy of StockCharts.com

Small-cap Stocks page 2 Source: Courtesy of StockCharts.com




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