Weiss Data Can Help Show You When to Worry (or Not!)

07/25/2017 2:55 am EST

Focus: STOCKS

Mike Larson

Editor, High Yield Investing

I’ve been steadfastly bullish since mid-to-late-2016, and I continue to recommend prudent, higher-yielding and higher-rated stocks and ETFs that pass our Ratings screens, asserts Mike Larson of Weiss Ratings. 


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The Byrds will be remembered forever for that catchy 1965 tune “Turn! Turn! Turn!”–the one that says there’s a time for everything, whether reaping or sowing, loving or hating, and weeping or laughing.

You could say the same about the markets. There are times investors should worry about protecting the wealth they have...and times they should focus on building more. Our Weiss Ratings data can help show you which is which.

One of the tools we offer is the Weiss Market Barometer, something I share each month in my High Yield Investing newsletter. It’s designed to let you know quickly and accurately whether the backdrop is favorable or unfavorable for stocks, and whether you should be ramping up or dialing down your exposure to risky investments.

Specifically, we measure 23 different indicators covering the financial markets, the credit markets, and the broader economy. Then we determine whether those indicators are getting better or getting worse over multiple time frames. That data is used to produce the master Barometer.

Here’s what the Barometer looked like in mid-July. You can see that interest rate spreads were relatively supportive of stocks, as was most of the economic data, particularly compared to where things stood last summer:

chart 1

Then there’s our Buy/Sell ratio. It compares how many Buy and Sell Ratings we have across our coverage universe, which is comprised of more than 14,000 stocks.

The higher the ratio, the better the fundamental and technical underpinnings of the broad market. This chart shows what the ratio looks like now, as well as how it has changed since the beginning of 2016:

chart 2

 

What’s the message here? That it’s steady as she goes for the markets! Despite some of the bellyaching you’ll hear on television or read on the internet, our Ratings indicators are still pointing higher.

That’s why I’ve been steadfastly bullish since mid-to-late-2016, and why I continue to recommend prudent, higher-yielding and higher-rated stocks and ETFs that pass our Ratings screens.

I’ve focused particularly on investments in the financial, defense, industrial, and information technology sectors.

One of my favorite plays, Raytheon (RTN), is rated A- by our Ratings system and up almost 18% year-to-date.

Another favorite in the financial sector, A-rated CME Group (CME), is up more than 24% in the past year. That’s well ahead of the 16% gain for the SPDR S&P 500 ETF (SPY).

Bottom line: When the data turn, turn, turn, so will I. But it hasn’t happened yet!

Follow Mike Larson and subscribe to Weiss Ratings products here

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