Investors are taking note and treading carefully in this range-bound stock market. Possible market movers this week including the Federal Open Market Committee meeting Wednesday and the on-going Greek drama aren’t expected to be significant enough drivers to get the market out of its zone.
Bulls are finding themselves “nervously long and they have to be in equities because there is no alternative,” said Mark Luschini, the Chief Investment Strategist at Janney Montgomery Scott.
He says bears are keeping a close eye on the Dow Transports (^DJT), “the transports indicative of economic activity – moving goods, from one point to the next, …and what we’re seeing right now is a fairly wide divergence and it’s unusual…so investors are trying reconcile in their mind why is that happening and what can the outcome be.”
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Citigroup
Luschini says investors can still put money to work in this tight-ranged market. He sees valuation support in financials, particularly universal banks like Citigroup (C). “Citigroup is among of the cheapest money centers in the United States, trading below book value, recently passed the stress test, instituted a dividend and then raised it…and we think there’s more to come”
Gilead
Gilead (GILD) is another stock he likes on valuation despite the speculative nature of the sector. “I do think biotechs are risky…Gilead, while technically a biotech company, is a large biotech company and is trading at about 10 times forward earnings, which is a huge discount to its biotech peers and even to a discount to the healthcare and S&P 500 at large,” he said.
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