Wyatt Research Week-in-Review: May 12-18

week-in-reviewA record week on Wall Street ended on a sour note.
For the first time ever, the S&P 500 topped 1,900 last Tuesday. It didn’t stay there for long. Stocks plummeted 30 points in the three days that followed, finishing the week a couple ticks lower than where they started.
As usual, the bears pounced on the mini-pullback.
“This Chart Shows Why the Market Is in Trouble,” was the Yahoo Finance headline.
“Stocks are Telling You a Bear Market Is Coming,” declared the Wall Street Journal’s Michael Sincere.
We’ve heard these cryptic warnings before. Analysts have been calling for a major correction for more than a year, insisting that stocks are overbought and that this rally simply cannot be sustained. Each time, the market has defied them, rising to record highs on almost a monthly basis. Not since October 2011 has the S&P 500 had a pullback of at least 10%.
Until further notice, this rally has shown no true signs of slowing down. Even Fed tapering hasn’t fazed it much. Stocks have actually risen in the five months since the Federal Reserve started scaling back its $85-billion-a-month buyback program.
Furthermore, stocks are up more than half a percent in May – the traditional beginning to Wall Street’s seasonal selloff period. And volatility remains close to five-year lows.
Rather than bracing for a mass correction every time stocks pull back a percentage point or two, investors should embrace this rally. It won’t go on forever. Might as well take advantage of this historic run-up while it lasts.
Small-cap stocks are particularly appealing, at least according to our resident small cap guru Tyler Laundon. He made a compelling argument this week as to why small caps look like a better long-term buy than large-cap stocks right now.
Tyler’s case for small caps was one of several convincing investment opportunities our analysts dug into this week at Wyatt Investment Research. Here’s what else was on our experts’ minds:
The Little-Known Industry That’s Profiting from America’s Energy Boom– The United States will produce more oil than ever this year – so much so that pipelines are overwhelmed. Another industry is picking up the slack … and laughing all the way to the bank.
How this Top Dividend Stock Beat Today’s Hottest Asset Class– Forget the collectible as an investment; I’ll take a high-quality dividend grower any day of the week.
Is It Time to Buy Small Caps?– For long-term investors, small caps might make a lot of sense, especially now. Based purely on technical indicators, small caps look like a better buy than large caps at the moment.
“Sell in May – Make it Pay”: Full Video Replay– Yesterday, Andy Crowder hosted another one of his highly popular options webinars – a special summer edition. The summer is traditionally the worst six months for individual investors. For Andy, it’s Christmas. In yesterday’s webinar, “Sell In May – Make it Pay,” Andy revealed his easy, step-by-step process for using simple options trades to consistently make 15% a month during the dog days of summer. He also offered some exclusive trade recommendations and answered listener questions. Click here for a full replay of Andy’s webinar.
The 3 Best BDCs to Buy for High-Yield Income– Because banks have moved into the esoteric and the exotic doesn’t mean the traditional banking model of borrowing at one rate and lending at a higher rate no longer works. It does, and there are companies posting profits and delivering high-yield income to their investors by doing so.
What the End of Net Neutrality Means for You– The concept of “net neutrality” is very simple: Internet service providers like Comcast (NASDAQ: CMCSA) and Verizon (NYSE: VZ) should treat all data – regardless of who produced it or the content – equally. This is already starting to change, however. And its ramifications will be far reaching.
The Only Small Cap ETF Index You Should Own– The Russell 2000 is widely heralded as the benchmark index for small cap stocks. Data for the index goes all the way back to 1979 (the actual index itself began in 1984). But the lesser followed S&P 600 Small Cap Index is, in many ways, the superior index.
Why Twitter Stock Still Isn’t Worth the Investment– For all the bluster surrounding Twitter’s IPO, there was one cold, hard truth: the company wasn’t making money. That hasn’t changed since the company went public.
VIDEO: Has QE3 Become Irrelevant?– The Federal Reserve continues to taper back QE3, reducing its monthly bond buybacks by $40 billion since December. Investors used to panic at the mere mention of “tapering.” Now no one seems to care. Is it a sign that QE3 did its job and the U.S. economy is ready to stand on its own two feet again?
Thanks for making us part of your weekend. Throughout the week, please make sure to visit WyattResearch.com for the information you need to know and opinions you need to read to become a better investor.

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