September Top Stock Ideas and Super SMID Granny Technicals. 3 facts drive bigger picture into YE = stay on target.

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VIDEO: Sept is coming to a close and its been a surprisingly strong month.  It is a reminder that 2024 has been a very strong year.  We discuss the state of the election in looking at polls vs betting markets (Duration: 6:31).

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• Updating list of Top Stock Ideas
• Updating 5 Super and 5 Sleeper SMID Grannies
• Chartbook linked below

To download the slide deck for our Market Update Webinar, please click HERE.

Macro Commentary

The fact that September is strong is a sign this is a very strong market

After falling -4% in the first week of September, the S&P 500 has managed to climb back steadily and is up 1.5% for the month. This is a sign of a strong market, marking the S&P 500 to be up 8 of the 9 months in 2024. Granted, there are still 6 days left, but this is a big comeback — since 1928, when the indices are -1.5% or worse in the first week of Sept, there is not a single prior instance equities were positive for the month. So, take this as a sign of a strong market.

• That said, we are still in the uncertain weeks into election day (41 days away) and our analysis shows this race is tighter than in 2016 or 2020. We look at Nate Silver’s poll-based model:
  – 2024: Harris vs Trump lead +8.4% on 9/24
  – 2020: Biden vs Trump lead +54% on 9/24
  – 2016: Clinton vs Trump lead +17.6% on 9/24
• So you can see this is a far tighter race than the past. The betting markets (Polymarket.com, etc) show a tighter race, but as we discuss in our video and note, Nate Silver’s model has outperformed betting markets. Why? In 2016, he had a higher probability of Trump winning (41%) vs betting markets (33%). So, we think his model remains the better standard.
• But a contrast is the latest adult identification poll by Pew Research. It shows that voters are leaning Republican by +3%. This is the first time since 2004 that voters leaned Republican. So, this could expose a flaw with the poll-based models used by Nate Silver.
• But the bigger picture remains the following 3 facts
• First, Fed is dovish and stocks are higher 3 months later, 7 of 7 times after first cut. As long as we are not in a recession.
• Second, after 10% gain in first half of a year (since 1928), equity markets are higher in second half with 9.8% gain, 83% of the time. The only down years were the “hawkish” years of Volcker. But now, the Fed is dovish (see above).
• Third, there is a lot of firepower. Margin debt actually fell -$14 billion in August to $797 billion. We are still way below the $936 billion levels of October 2021. And now the Fed is dovish.

So bottom line, stay constructive. We like small-caps IWM 0.62%  and Cyclicals XLI 0.57%  XLF 0.40%  and the AI-related stocks NVDA 0.26%  etc. But we have much more to discuss in our monthly webinar.

Investment Ideas: Top large-cap stock picks + Super SMID Grannies

As we are rebranding our monthly webinar, we are introducing a new section of top stock ideas:

• The top large-cap stock ideas are based on a universe of 46 large-cap stocks that are widely held by investors and market cap >$40b

• The new top stock ideas follow the similar methodologies we use to identify super SMID granny ideas
• Essentially, we aim to identify the most timely stock ideas by cross referencing the trend analyses, quantamental works and technical studies.
• In more detail, the framework is composed of a criteria of 4 factors to narrow down to tactical buys:
  – fundamentals using DQM model managed by “tireless Ken”
  – momentum rating based weighted average performances of recent period
  – technical strength measured by Price >20 DMA, 20 DMA vs 200 DMA and combos
  – Mark Newton’s judgement on technical outlook
• Our top 5 Stock Ideas for September 2024:
  – NVIDIA Corp (NVDA 0.26% ) <– carry over
  – Meta Platforms Inc (META -0.23% )
  – Uber Technologies Inc (UBER -0.61% )
  – Eli Lilly And Co (LLY -1.69% )
  – Tesla Inc (TSLA -1.02% )

• The bottom 5 stock ideas (to avoid) are:
  – Pfizer Inc (PFE -0.03% )
  – Nike Inc (NKE 1.56% )
  – Intel Corp (INTC 1.23% )
  – Ford Motor Co (F 2.40% )
  – Boeing Co (BA 1.55% )

SUPER SMID GRANNIES: 5 Super and 5 Sleeper

Last December, we upgraded Small-caps to be the #1 recommendation in our 2024 year-ahead outlook. We also created the SMID granny shot portfolio strategy as many of our clients asked us for our Top SMID stock picks.

• We believe the SMID Grannies could benefit from the multiple themes and secular tailwinds
• The SMID Grannies shots were selected from a universe consisting of 2,492 small and mid-cap stocks.
• From the SMID granny shots portfolio, we employed the same framework mentioned above to identify the 5 most timely ideas and 5 least timely ideas within the SMID granny shots portfolio.

• We have 5 tactical buys aka “Super SMID Grannies”
  – Palantir Technologies Inc (PLTR -0.22% ) <– carry over
  – Applovin Corp (APP -1.97% ) <– carry over
  – ePlus inc (PLUS 1.61% ) <– carry over
  – Bancorp Inc (TBBK 0.95% ) <– carry over
  – ADMA Biologics Inc (ADMA -0.26% )
• The bottom 5 “Sleeper SMID Grannies” are:
  – Veeco Instruments Inc (VECO 5.67% ) <– carry over
  – Amkor Technology, Inc (AMKR 3.81% ) <– carry over
  – Blueprint Medicines Corp (BPMC 2.37% ) <– carry over
  – Ultra Clean Holdings Inc (UCTT 6.21% ) <– carry over
  – Mirum Pharmaceuticals Inc (MIRM -0.74% )

Please see Mark’s technical note tonight for commentary on the Top 5 Stock Ideas and 5 Super SMID Grannies.

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42 SMID Granny Shot Ideas: We performed our quarterly rebalance on 7/16. Full stock list here -> Click here

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PS: if you are enjoying our service and its evidence-based approach, please leave us a positive 5-star review on Google reviews —> Click here.

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Key incoming data September:

• 9/3 9:45 AM ET: Aug F S&P Global Manufacturing PMI Tame
• 9/3 10:00 AM ET: Aug ISM Manufacturing PMI Tame
• 9/4 8:30 AM ET: Jul Trade Balance Tame
• 9/4 10:00 AM ET: Jul JOLTS Job Openings Tame
• 9/4 10:00 AM ET: Jul F Durable Goods Orders Tame
• 9/4 2:00 PM ET:  Fed Releases Beige Book Tame
• 9/5 8:30 AM ET: 2Q F Non-Farm Productivity Tame
• 9/5 8:30 AM ET: 2Q F Unit Labor Costs Tame
• 9/5 9:45 AM ET: Aug F S&P Global Services PMI Tame
• 9/5 10:00 AM ET: Aug ISM Services PMI Tame
• 9/6 8:30 AM ET: Aug Non-Farm Payrolls Tame
• 9/9 9:00 AM ET: Aug F Manheim Used vehicle index Mixed
• 9/9 11:00 AM ET: Aug NY Fed 1yr Inf Exp Tame
• 9/10 6:00 AM ET: Aug Small Business Optimism Survey Tame
• 9/11 8:30 AM ET: Aug CPI Tame
• 9/12 8:30 AM ET: Aug PPI Tame
• 9/13 10:00 AM ET: Sep P U. Mich. Sentiment and Inflation Expectation Tame
• 9/16 8:30 AM ET: Sep Empire Manufacturing Survey Tame
• 9/17 8:30 AM ET: Aug Retail Sales Data Tame
• 9/17 9:00 AM ET: Sep M Manheim Used vehicle index Tame
• 9/17 10:00 AM ET: Sep NAHB Housing Market Index Tame
• 9/18 2:00 PM ET: Sep FOMC Decision Tame
• 9/18 4:00 PM ET: Jul Net TIC Flows Tame
• 9/19 8:30 AM ET: Sep Philly Fed Business Outlook Tame
• 9/19 10:00 AM ET: Aug Existing Home Sales Tame
• 9/23 8:30 AM ET: Aug Chicago Fed Nat Activity Index Tame
• 9/23 9:45 AM ET: Sep P S&P Global Manufacturing PMI Tame
• 9/23 9:45 AM ET: Sep P S&P Global Services PMI Tame
• 9/24 9:00 AM ET: Jul S&P CoreLogic CS home price Tame
• 9/24 10:00 AM ET: Sep Conference Board Consumer Confidence Tame
• 9/25 10:00 AM ET: Aug New Home Sales
• 9/26 8:30 AM ET: 2Q T 2024 GDP
• 9/26 10:00 AM ET: Aug P Durable Goods Orders
• 9/27 8:30 AM ET: Aug PCE Deflator
• 9/27 10:00 AM ET: Sep F U. Mich. Sentiment and Inflation Expectation
• 9/30 10:30 AM ET: Sep Dallas Fed Manuf. Activity Survey

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023: