The Dow Washing Machine

U.S. bond yields are at a 2-year high while stocks fell for the fourth straight day. It’s becoming increasingly clear that the indices have taken a breather. After a 4.8% run for the Dow in July, investors are taking profits and setting up their next moves for the rest of summer and beyond. The change is good, but it can feel like the index is stuck in a spin cycle—going around and around, but getting nowhere.

You can see this as clear as day in our Market Dashboard—available right on our homepage. This free tool highlights the biggest movers for the Dow, S&P 500 and Russell 2000, every trading day of the year.

When you look at Today’s Leaders, you see that the Dow stocks that are moving higher are not very highly rated in Portfolio Grader.

Today Intel Corp. (INTC) is actually the best Dow performer. The stock closed up 1.6% today. I give the stock several failing fundamental grades rank it as an F-rated sell overall. While this company pulls off decent return on equity, buying pressure has all but dried up for INTC so I have had it at a sell for the past 12 months running.

The one stock on today’s list of the Dow’s top three daily performers that I actually like is Johnson & Johnson (JNJ). Steady fundamental improvements in 2013 have me encouraged and I have a strong buy rating on shares. There is still room for improvement in its earnings surprise rating, but with a 3% annual dividend yield and highly-rated sales and earnings growth this big Dow stock is on the right path.

Seeing strong daily performance from fundamentally strong and fundamentally weak companies is typical for transition periods for the market. When there isn’t any big news, investors go broad with their buys. They think big stocks mean safe stocks and that’s why we’re seeing companies like Intel Corp. lead the Dow today.

But that’s all about to change. The flight to quality is coming, where money will stop flowing into big companies with poor fundamentals. I expect that we will see more A- and B-rated stocks appear in the Today’s Leaders section of our Dashboard in the coming days and weeks as investors separate out good stocks from bad.

It’s a good thing you already have access to Portfolio Grader and can get in ahead of these late comers and benefit from their tardy buying pressure that is headed this way come earnings season.

My advice to you is to check in with our dashboard daily and see the change for yourself. Do that and pick up shares in top-rated large-cap stocks and I know you’ll be one step closer to meeting your financial goals.

And, if you want more daily leaders, visit Portfolio Grader and our Dow 30 Leader Board.


Louis Navellier

Louis Navellier

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