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Opinion: Insider purchases say a Santa Claus rally is underway-here are the 10 stocks they like

Stick to your stock market exposure and add more if possible.

Twin fears that surprise investors-Omicron COVID stocks and inflation-are overkill. As more people understand this, inventories should go higher, leading to a Santa Claus rally later this month.

Corporate insiders have confirmed this view. They have significantly strengthened their buying due to the weakness of the market. In addition, we buy all the right groups for travel, retail, energy, materials and more. These are cyclical areas where we do our best as growth concerns recede, and insiders are aware of it. Don’t give in to defensive names like consumer classics.

Even if the index is narrow like the S & P 500, the damage was great, so there are many stock price bargains.
SPX,
-0.96%

And Dow Jones Industrial Average
DJIA,
-0.21%

Supported by some big names, it hangs tough.Russell 2000 Small Cap Index
RUT,
-1.96%

Has fallen by more than 10%, and most stocks in more widely followed indexes, such as the S & P 500, have also fallen by more than 10% at some point recently.

Pick out 10 names that insiders like. It also includes a name recently proposed in the Stock Advisory Letter Brush Up on Stocks (links can be found in my biography below). But first, let’s take a quick look at why insiders like me don’t seem to worry too much about the fear of twins.

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Omicron

The concern here is that this new variant is far more contagious and deadly than the delta variant.

The first fear may be true. The number of cases is increasing rapidly in South Africa, suggesting that it is more contagious. But when it comes to lethality, Omicron seems calm so far. There’s still a lot to learn, but this is a consistent message from COVID-experienced physicians and health authorities.

“Remember what we see clinically in South Africa and be in this epicenter where I am practicing. It’s very calm for us,” said South Africa with 30 years of experience. Says doctor Angelique Coetzee. “These are mild cases. We don’t admit anyone. I talked to other colleagues and they are drawing the same picture.”

Hospitalization in South Africa is “rapid, but not incredibly fast,” agrees William Hanage, an associate professor of epidemiology at Harvard University and co-director of the Center for Infectious Disease Dynamics. US health officials have confirmed that Omicron may not be particularly deadly. Both the Centers for Disease Control and Prevention and the Minnesota Department of Health describe the first mild cases ever found in the United States.

This is not surprising if the variants of Omicron are mild.Respiratory virus evolves naturally More contagious and less lethal, Says Professor Karl Lauterbach, a German epidemiologist. This makes sense from a virus point of view. If the virus spreads rapidly and does not kill the host, the virus is more likely.

Regarding the “escape” or avoidance of vaccines, former Food and Drug Director Scott Gottlieb believes that current vaccines are effective against Omicron by suppressing symptoms sufficient to reduce hospitalization. “We have a high degree of confidence that it will remain effective,” he says. “Is it the same 95%? Probably not, but it still has a meaningful amount of effect.”

He states that RNA vaccine companies can tweak to make the vaccine even better in the coming months.Vaccine companies like Pfizer
PFE,
+ 1.90%

Make sure the booster works and that the booster can be customized for the omicron variant. “In our view, Pfizer reiterates that current boosters are probably effective,” says Jeffreys biotechnology analyst Michael Yee. “The new version in 2022 could be even better.”

inflation

There are many reasons to think that inflation concerns are exaggerated. The concern here is that the Federal Reserve is “behind the curve” and must aggressively raise rates, potentially killing growth and bull markets. This does not happen. One symptom is a sharp drop in commodity prices and shipping costs. These are often at the forefront of inflation.

Next, let’s delve into the current inflation surge. To do this, take into account that the Federal Reserve Board of Atlanta has classified some of its core CPI indexes into “flexible” and “sticky” categories (slow). please. Flexible components now dominate headline inflation.

These prices have risen about 15% over the past year, compared to a 3% rise in “sticky” prices, said Jim Paulsen, economist and market strategist at Reuthold Group. “It’s annoying, but the overall rise in the core CPI index is almost entirely due to prices that traditionally fluctuate significantly both up and down,” he says. This suggests that headline inflation has reversed and is dropping rapidly from here.

That’s what many analysts and bond market investors think. Analysts expect inflation to be less than 2% in the next two to ten years, according to forecasts tracked by the Atlanta Federation. Meanwhile, bond market investors predict a 10-year inflation rate of around 2.6%, Paulsen said. I’m not terribly worried.

These predictions make sense to me, as companies say that supply chain issues will be fixed by mid-next year. Shortages associated with supply chain problems are a major cause of price spikes.

Finally, mobility tracking data from Alphabet
Google,
-1.25%

Google,
-1.32%
,
Apple
AAPL,
-1.11%
,
OpenTable and the Transportation Security Administration show that Americans have significantly reduced the amount of public outings. According to my calculations, TSA check-in on November 30th and December 1st was 79% to 81% of the 2019 level, compared to 85% to 90% for the last 10 days. If this decline in mobility slows the economy a bit, it will ease the fear of inflation and the need for the Fed to steal the punch bowl too soon.

insider

In the March-October 2020 mini-replay, when the COVID crisis first intensified, insiders stepped up again to buy market weaknesses caused by the fear of new COVID. Indeed, insiders are not epidemiologists. But they are not dummies either. They have a good network of contacts and they see the tone of their business every day. Their purchases are not defensive names, but focus on all relevant areas such as circulation, retail, energy and industry.

Companies that insiders have bought meaningful amounts in the last few days include outdoor and retail store names Six Flags Entertainment
Six,
-2.72%
,
American Eagle Outfitters
AEO,
+ 1.71%
,
Nordstrom
JWN,
-2.04%

And American Woodmark
AMWD,
+ 0.20%

Travel names like Delta Air Lines
DAL,
+ 0.04%

And Playa Hotels & Resorts
PLYA,
-0.69%

Energy names like ExxonMobil
XOM,
-0.54%

And EOG resources
EOG,
-0.23%

Material names like Cleveland Cliffs
CLF,
+ 0.47%

And Orion Engineered Carbons
OEC,
+ 0.78%
..

Cheeks!

Their purchase confirms the work of seasonal and trading experts Larry Williams. His work tells me that we can expect another “Santa Claus” rally later this month. As you can see, this makes sense to me because the two main horrors are the false horrors that it takes a little longer to retreat more completely.

Michael Brush is a MarketWatch columnist. At the time of publication, Brush owned GOOGL. Brush proposes GOOGL, SIX, AMWD, DAL XOM, EOG and CLF in his stock newsletter. Brush up stocks.. Follow him on Twitter @mbrushstocks..



Opinion: Insider purchases say a Santa Claus rally is underway-here are the 10 stocks they like

Source link Opinion: Insider purchases say a Santa Claus rally is underway-here are the 10 stocks they like

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