On Monday, August 5, the S&P 500 (SPX) fell right to its lower channel off the lows in October 2022 and March 2023. Yes, that is the trendline we didn't trust because it was busted twice in October 2023. We also got close (at 5,119) to a 78.6% retracement of the rally from April until July (at 5,107). The SPX cycled into oversold territory at 30 on the 14-day relative strength index (RSI), but could become more oversold. The rising 200-day is at 5,012, while the April low is at 4,967. One of our favorite charts is the weekly SPX with the 200-week average and the weekly Bollinger Bands. While we still have some distance, the slightly rising lower band is down near 5,000 as of this writing. A touch/undercut and then a recapture of the lower band generally has indicated an excellent time to buy the index/market. A good confirmation would be a move back over the middle band. But note the failures in 2022's bear market: two times the SPX failed at/near the middle band, while a third move surpassed the middle band but ended up failing The VIX exploded to 66% at the open on August 5, its highest level since the pandemic. The three-day rate-of-change (ROC) was 136%, the highest since early 2018. Since 1990, this is the third-highest three-day ROC. We had a three-day decline of 9% in 2018 and a two-day decline of 6% in 2015. The VIX moves sharply when stocks move lower quickly lower. The three-day SPX decline was 7.3% at the lows on August 5 and ended the day at 6.1%. Both the drops in 2018 and 2015 were followed by a quick rally and then a retest of the lows or a double bottom. Both double bottoms were followed by major rallies that failed.

Argus has published its latest Portfolio Selector, which features its popular Focus List. Each month, Director of Research Jim Kelleher, CFA, surveys the team of Argus Research industry analysts for their timeliest recommendations out of the company's fundamental universe of approximately 500 stocks. The Focus List typically includes 30 stocks: turnover is high, as Jim typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus.

Two important inflation reports released last week indicated that overall pricing pressures have retreated from peaks in 2022. But both also confirmed that inflation remains above the Fed's target of 2.0% and progress to that level may be hard to achieve. With the Consumer Price Index (CPI) report, there were some positive results. The overall inflation rate in June was 3.0%, lower than the prior month's 3.3%. That good news was further supported by a decline in core CPI, which excludes the impact of food and energy and rose at an annual pace of 3.3% over the past year, lower by 10 basis points month over month. What's propping up that core CPI? Transportation Services (+9.4% YOY) and Shelter (+5.2% YOY), which have prices that don't typically fall sharply. In contrast, prices for Gasoline and New & Used Cars are actually lower YOY. The other inflation report was the Producer Price Index (PPI), which measures pricing trends farther up the supply chain, at the manufacturing level. Here, we also saw a modest increase in the rate of inflation. The PPI final demand annual rate through June was 2.6%, compared to 2.2% in May, and the prices for processed goods for intermediate demand outright declined. The June 2022 CPI rate marked the peak reading for the index that cycle, and we expect pricing pressures to continue to ease as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed lifted the feds fund rate from 0.0% to above 5.25% over the past 24 months, and the rate hikes appear to be reducing inflationary pressures. We still look for the U.S. central bank to be lowering rates in 2H24 and 1H25 as concern shifts more toward economic growth.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are DuPont de Nemours Inc (DD); GE Vernova Inc. (GEV); Palantir Technologies Inc (PLTR); Dicks Sporting Goods, Inc. (DKS) and the Focus List deletions are ASML Holding NV (ASML); Linde Plc. (LIN); Oshkosh Corp (OSK); TJX Companies, Inc. (TJX).

Monday Tee Up: Housing & Retail This is not a full trading week, with the Juneteenth holiday on Wednesday. But there will be retail sales and housing data to consider, as well as a handful of earnings. Wall Street will continue to digest the big flow of news from the last few weeks, including the Fed meeting and the recent data on inflation and jobs. The Dow Jones Industrial Average ended last week lower by 0.5%, the S&P 500 gained 1.6%, and the Nasdaq was up 3.2%. For the year, the DJIA is higher by 2%, the S&P is up 14%, and the Nasdaq has powered ahead by 18%. On the economic calendar, Tuesday brings Retail Sales, Industrial Production, and Capacity Utilization data. Thursday features Housing Starts. Friday delivers updates on Existing Home Sales and Leading Economic Indicators. At least seven Fed officials have public speaking engagements this week, and they likely will face questions about the 'dot plot' released last week -- which now indicates only one interest-rate cut this year. On the earnings calendar, Lennar reports on Monday; KB Home on Tuesday; Jabil, Kroger, Darden Restaurants, and Accenture on Thursday; and CarMax on Friday. The homebuilder earnings, coupled with the housing data, should paint a detailed picture of the state of housing. Overall earnings for 1Q came in 8% higher than in the same quarter last year. That's better than was expected before the reporting season started. We expect earnings to improve further in the second half of the year. For the full year, we forecast a 9.5% gain. Second-quarter earnings season kicks off on Friday, July 12, with the big banks stepping up to the plate. Last week, data showed some progress on inflation. CPI edged down to 3.3% for May versus 3.4% for April, while core CPI dipped to 3.4% from 3.6%. As expected, the Fed did not move on interest rates, but the dot plot surprised Wall Street with only one rate cut implied for this year. Despite that headline news, we still believe the Fed will cut twice this year and two more times in 2025. Mortgage rates dipped further below the 7% mark last week, to 6.95% for the average 30-year fixed-rate mortgage. Gas prices dropped again, to $3.43 per gallon for the average price of regular gas. The Atlanta Fed GDPNow indicator is forecasting for 2Q and calls for expansion of 3.1%. The Cleveland Fed CPINow indicator for June is at is 3.15%. The next Fed rate decision is at the very end of July, with odds for a rate cut at 10%. The odds pop to 68% for a cut in mid-September, to 80% for November 7, and to 96% for December 18.

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.

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.

This edition features an overvalued tech sector; the capitol riot; fast fashion; and notes from Intel, Veolia, and Aphria.

This edition features Pfizer and BioNTech's COVID-19 vaccine; new coverage of Roku; an Australian home improvement retailer; and notes from Tencent, Palantir, and Aurora Cannabis