RJ Hamster
Must Read: The Market Is Getting More Selective –…
The Market Is Getting More Selective – 202 Stocks Just Changed Grades
If you watched the Super Bowl on Sunday, you already know it ended with the Seattle Seahawks taking home the Lombardi trophy.
And while there were plenty of standout moments, one key factor was the deciding factor of the game: their defense.
The Seahawks’ defensive line completely shut down the New England Patriots’ offense for most of the game. In fact, the Patriots didn’t successfully move the ball down the field until the fourth quarter. But by then, it was too little, too late.
Interestingly, the Seahawks’ first Super Bowl championship also came on the back of an impenetrable defense, when they crushed the Denver Broncos 43–8 in 2014. Clearly, defense has been a championship-winning formula for this franchise.
In the stock market, the same principle applies. Long-term success doesn’t come from chasing every headline or hot trade. It comes from sticking to a disciplined approach and focusing on fundamentally superior stocks – whether we’re in a bull or bear market.
And right now, as market leadership begins to shift, that discipline matters more than ever.
A Shift in Market Leadership
The shift in market leadership I just mentioned is already showing in the numbers.
If the January barometer – “as January goes, so goes the year” – is fulfilled, it’s going to be a phenomenal year for the stock market. Now, if you’ve followed me for any length of time, you know I don’t put much stock in Wall Street adages. However, this one is interesting because there’s a fair amount of data to back it up.
Over the past four decades, the S&P 500 has finished January higher 25 times. And in those instances, the market went on to post gains over the next 11 months roughly 80% of the time. On average, the S&P 500 went on to rally and end the final 11 months of the year about 11% higher.
And this January lived up to that reputation. The S&P 500 rose 1.4%, while the Dow rallied 1.7%.
But what really stood out to me was where the strength showed up.
Small-cap stocks outperformed their large-cap peers by a wide margin, with the Russell 2000 jumping 5.3% in January.
Clearly, something is changing beneath the surface.
Individual and institutional investors alike are beginning to divert capital into domestic stocks – which tend to be small- and mid-cap companies – rather than the large, multinational stocks that dominate the S&P 500.
In other words, market leadership is shifting.
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How I Separate the Leaders From the Laggards
When market leadership begins to shift like this, you can’t afford to guess.
As I like to say, our best defense is a strong offense of fundamentally superior stocks. And in an environment where selectivity is becoming more important by the day, having a disciplined way to separate the leaders from the laggards matters more than ever.
That’s why I rely on my Stock Grader tool (subscription required).
Now, I want you to be prepared to navigate this shifting market environment with confidence. So, let’s take a closer look at my latest Stock Grader ratings for 202 big blue-chip stocks. Of those 202 stocks…
- Twenty-three stocks were upgraded from Strong (B-rating) to Very Strong (A-rating).
- Fifty-three stocks were upgraded from Neutral (C-rating) to Strong (B-rating).
- Thirty-four stocks were upgraded from Weak (D-rating) to Neutral.
- Seven stocks were upgraded from Very Weak (F-rating) to Weak.
- Eighteen stocks were downgraded from Very Strong to Strong.
- Twenty-seven stocks were downgraded from Strong to Neutral.
- Thirty-three stocks were downgraded from Neutral to Weak.
- And seven stocks were downgraded from Weak to Very Weak.
I’ve listed the first 10 stocks rated as Very Strong below, but you can find a more comprehensive list – including all 202 stocks’ Fundamental and Quantitative Grades – here. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly.TickerCompany NameTotal GradeAEISAdvanced Energy Industries, Inc.AAMDAdvanced Micro Devices, IncAAPGAPi Group CorporationAASNDAscendis Pharma A/S Sponsored ADRAASXASE Technology Holding Co., Ltd. Sponsored ADRAATOAtmos Energy CorporationABWABorgWarner Inc.ACACICACI International Inc Class AACORCencora, Inc.ADLTRDollar Tree, Inc.A
What Comes Next
The takeaway here is simple: The market is becoming more selective.
Leadership is shifting, smaller-cap stocks are beginning to assert themselves – and fundamentals are once again doing the heavy lifting. In an environment like this, the difference between owning the right stocks and the wrong ones can be dramatic.
That’s exactly why I continue to emphasize discipline – and why tools like Stock Grader become so valuable when the market starts separating leaders from laggards.
If you want a deeper look at why this shift is happening now – and how I’m positioning ahead of what I believe could be a major turning point for AI and the broader market – I’ve just released a new presentation that walks through it step by step.
In this special briefing, I explain:
- Why expectations have become the real risk in today’s market
- How the transition from one phase of the AI boom to the next is unfolding
- And how I’m using my quantitative system to identify opportunities before the crowd reacts
You can watch the presentation here now.
As always, stay disciplined – and make sure you’re positioned on the right side of this shift.
Sincerely,
Louis Navellier
Editor, Market 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Atmos Energy Corporation (ATO)
