By Paul Farrell Sept. 28, 2018 8:00 p.m. ET Big Momentum Tempts
Time for a Pause
by The Lancz Letter
Sept. 25: Last month, we covered the opportunities in depressed industrials and select special situations rather than chase the momentum stocks so in favor.
It is fortunate for investors who seek to control risk (rather than just ride the momentum) that so many quality companies are still at attractive valuations. This was not the case in 2007, when we warned investors it was time to take profits. Record highs last week in the Dow Jones Industrial Average—not seen since last January—show that the market is broadening. This is a positive for the long-term health of the stock market and gives us more confidence to buy the quality underperformers. We would rather concentrate on the best risk-adjusted opportunities than rely on the momentum-led star stars continuing to outperform from current lofty valuations.
Jobless-Rate Dip Will Continue
by Maria Fiorini Ramirez, Inc.
Sept. 27: Seasonally adjusted initial unemployment claims for the week ended on Sept. 22 were up 12,000, to 214,000, from a slightly revised 202,000 in the preceding span. The median forecast for the week was 210,000 (our own estimate was 205,000), so the reported outcome was modestly above expectations. The four-week moving average was 206,000, which followed 206,000 last week and 208,000 the week before that—very low levels.
For the coming week, the seasonal adjustment process is calibrated so that a 6,000 decline in unadjusted claims would leave the seasonally adjusted level unchanged. This appears reasonable based on past results for the week, so we look for little if any change in the seasonally adjusted level from