E Weekly Stock Report

Top scoring weekly returns:  Buy and Hold 1 Year

The top scoring sector remains utilities. Consumer goods, industrial goods, and healthcare also score above average.
 
Financials, services, basics, and technology score below average.
 
In consumer goods, focus on mid and small cap. In industrial goods, buy large and small cap. In healthcare, concentrate on large cap.  
 

The following chart visualizes score by market cap.

This next chart shows four, eight, and 12 week historical scores since 2010. Risk reward is favorable for beta when the blue line is north of the red and green line.

The following table breaks out seasonality for major market ETFs for the 3 month period beginning June 1st and ending August 31st. Typically, manager de-risking favors defensive baskets.  Seasonality for the MSCI EAFE (EFA) is better than the S&P 500 (SPY) suggesting managers should focus on overseas opportunities.  The median return for the EFA over the next three months is 1.91% versus -0.27% for the SPY. Nasdaq seasonality is also marginally better than the SPY given that the Nasdaq 100 (QQQ) has posted gains in 6 of the past 10 years for a median 1.32% return.  
 

The issuance calendar, quarterly tax payment calendar, and principal and dividend reinvestment  is bearish for Muni’s during June (anticipatory activity elevates the bucket in May) and bullish in July and August.

The following chart compares the performance of the MSCI EAFE ETF (EFA) against the S&P 500 (SPY) since 2004. We are moving into a robust period for European out-performance — plan accordingly.

Utilities

The top scoring basket remains utilities. Historically, utilitity stocks (XLU) post strong returns in June and July on peak seasonal cooling demand and contract rate adjustments. Higher natural gas prices remain a catalyst for marginal spot prices heading into summer.