October 3, 2017
By Louis Navellier
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All content in this introduction to Marketmail represents the opinion of Louis Navellier of Navellier & Associates, Inc.
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Tech Stocks Sag Then Recover Strongly
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The S&P 500 reached another all-time high last Friday, closing September up nearly 2% (and +12.5% for the year-to-date). However, last week began with another market scare. On Monday, there was a serious correction in technology stocks and a big rotation into crude oil as well as cyclical stocks. Fortunately, many of the more fundamentally sound tech stocks subsequently rebounded impressively after Monday's "tech wreck." The best news is that money isn't leaving the stock market; instead it is being reshuffled. For three straight weeks, dividend stocks have been performing well. This surge in dividend stocks is a good omen, since it means that the foundation under the latest bull market surge remains very solid.
One of my favorite tech stocks, Micron Technology (MU), posted better than expected quarterly sales (a 3% surprise) and earnings (a 9.8% surprise) after the market closed on Tuesday. The company also raised both its current quarter's sales and earnings guidance well above previous analyst estimates. As a result, on Wednesday, Micron Technology led the entire technology sector higher, erasing memories of Monday.
Moving into October, I expect wave after wave of similar sales and earnings surprises to propel select technology stocks higher, especially after October 15, when third-quarter earnings announcement season commences. In addition, October marks the start of the seasonally strongest time of the year. Last week's monthly seasonality report from Bespoke Investment Group ("October Seasonality," September 28, 2017) shows that October, November, and December have been the #2, #3, and #5 best months for the DJIA over the last 20 years. Over the last 20 years, the Dow Jones Industrial Average has gained an average of just 1.32% in the first nine months of the year, but then it delivered a 5.46% average gain in the fourth quarter.
(Please note: Louis Navellier does currently hold a position in MU. Navellier & Associates does currently own a position in MU for client portfolios).
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