Many in the investment world seem more focused than normal on what has happened historically in the equity markets on a seasonal basis, likely spurred by the pending presidential election. But such an exercise depends on what study one looks at, how far back the data goes (watch out for cherry-picking), and what year is examined within a four-year presidential term. Yet end of day, market returns have been pretty consistent over the years, regardless of whether the performance is measured in months, weeks, or even days. How can this be? There are a couple of structural reasons. There are times during the year when there is an influx of money into the markets; this generally helps the early part of the year and also late in the year, as investors fill up retirement funds early on and big wigs invest juicy bonuses as the year ends. Meanwhile, the U.S. economy used to be heavily weighted toward manufacturing, with companies susceptible to making various mistakes with inventories. Today, much of the consumer economy is in services, so those cycles have faded to some degree. Ultimately, many market studies have a bullish bias as the long-term returns are skewed to the positive side; after all, the market rises something like seven out of every 10 days. This year, many were worried about historically weak September, especially the last two weeks -- but so far, that fear has been a bust. One consistent historical event has been weakness in October during a presidential election year. We can't get around that, but the eventual election outcome has a lot less impact on financial markets than most believe. (Mark Arbeter, CMT)

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

With WTI dropping below $70/barrel and the 10-year Treasury falling under 3.8%, the U.S. consumer has some tailwinds to keep the recession talk at a very low murmur. But maybe not if you accept the constant bearishness from the perma-bears who always dig deep and find obscure reasons for recessions and bear markets. Crude oil closed at $68.83 on Wednesday, its lowest level since December 2023. Oil has dropped from an intraday peak of $87.67 on April 12; that's 21% in a little over four months. There is multi-year chart support for WTI in the low- to mid-$60s range (ex. the pandemic). More relevant for consumers, gasoline has dropped to $1.95/gallon (ex. taxes, etc.) from an April 16 close of $2.82 (or by 31%). While it's not heating season yet, heating oil has fallen to $2.15/gallon from $2.96 in February (or 27%) and natural gas has plummeted 32% in less than three months. The COT data for all these energy products has improved -- so we may be approaching an intermediate-term bottom. The 10-year has fallen 94 basis points (bps) since April 25 and is close to breaking to its lowest level since mid-2023. This has led to a 90-bps drop in the average 30-year fixed mortgage since late April (to 6.35%) -- down from the peak in October 2023 (of 7.8%). With all this consumer stimulus, the Federal Reserve hasn't done a thing. The market, once again, is doing the Fed's job. (Mark Arbeter, CMT)

On Tuesday, stocks passed their first test of the week with flying colors after a better-than-expected PPI print. The S&P 500 (SPX) popped 1.7%, the Nasdaq ripped higher by 2.4%, and the Nasdaq 100 jumped 2.5%. The indices are close to turning a number of short- to -intermediate-term technical indicators back to bullish, and quickly. It is now clear that the big downside reversal and weak close on August 7 was one of those nasty fake-out days that are so often seen at intermediate-term bottoms and tops. Technicians love these fake-out days and love even more that the reversal from recent panic lows is taking the shape of a "V," a favorite technical bottom (NOT!). From August 7 through August 13, the SPX jumped 4.5%, the biggest four-day gain since early November 2023, when the market was emerging from the July-to-October pullback. Since August 6, the index has seen daily gains of 1%, 2.3%, and 1.7%, which is pretty impressive. The bear flags that we thought might be developing on the major indices were blown up on Tuesday, although we still might be working on a bearish wedge. But for that to happen, stocks would need to turn down very quickly. The SPX has climbed back above its 21-day exponential moving average (EMA) after losing it on August 1, and the five-day/13-day EMA crossover is very close to turning back to bullish as the index approaches both a 61.8% retrace and the 50-day (which are in the 5,452 to 5,460 region). The four-day pop for the Nasdaq 100 is 6.4%, the best such run since November 2022 when the ETF (QQQ) was bottoming. The five-/13-day EMA cross is close to turning bullish, the momentum downtrend has been busted, and a 50% take-back at 463.50 is very near. (Mark Arbeter, CMT)