Times certainly have changed in the stock market, as former "can't miss" stars lag badly and former laggards are ripping higher. One of the areas where this is most evident is in Information Technology (and we have talked about this change several times). Other than Nvidia (NVDA, the "King of AI"), Broadcom (AVGO), and maybe a few others that are hanging very close to all-time highs, the rest of the semiconductor plays have been awash in downtrends since peaking in July 2024. Many of these names have dropped below their 200-day and 50-week averages and are closing in on testing their 21-month exponential averages. The iShares Semiconductor ETF (SOXX) has declined 18% over the past four months and this week busted its 200-day for the fourth time since August. The SOXX remains above its corrective low from August 7 and currently is testing its important 50-week average. Still, the IT sector (XLK) has rallied since August 7 and made a very minor all-time high just last week. At that peak, XLK had rallied 21% from its corrective low. The largest IT winners over the past three months have been GEV, ORCL, TEAM, CRM, FTNT, DOCU, ZM, MRVL, CSCO, ADSK, WDAY, INTC, NOW, and FFIV. Gains for these stocks range from 28% to 86%. Most of the winners come from cloud computing, cyber security, and software. The largest ETFs in those areas include First Cloud Computing (SKYY), First Trust Cybersecurity (CIBR), and iShares Software (IGV). All three ETFs have shown strong relative strength versus the QQQ and the semis since July. (Mark Arbeter, CMT)

Occidental Petroleum is an independent exploration and production company with operations in the United States, Latin America, and the Middle East. At the end of 2023, the company reported net proved reserves of nearly 4 billion barrels of oil equivalent. Net production averaged 1,234 thousand barrels of oil equivalent per day in 2023 at a ratio of roughly 50% oil and natural gas liquids and 50% natural gas.

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.

Small investors appear to like what they see and have demonstrated this by leaning heavily on call options versus put options. The five-day CBOE equity-only put/call (P/C) ratio fell to 0.51 at the end of September, the lowest reading since July 2023 when it fell to 0.48. That was just when the stock market was peaking and ended up falling until the end of October. Since the low on September 26, the five-day P/C has climbed back to 0.57, which is still a fairly low level. However, the 21-day equity-only P/C ratio is still falling, which is bullish for stocks. Why? Heavy call buying versus put buying places a bid under prices. These P/Cs are low and warning that investors are leaning very hard on the bullish side of the market, are not worried about the downside, and are doing some hedging. But generally there is a turn in this action toward more put buying before the market falls back. So if the 21-day turns higher, that would be the signal that stocks might well experience some pain. We are watching this combination of P/C ratios very closely. While we think the bull market has room to run, the headlines stink and October can be a volatile month, especially during the election cycle. The market has survived wars, shipping issues, elections, and just about everything else over the decades -- and prices still trend higher over the long term. Near term, we think it's a good idea to consider some hedging just in case things turn ugly. We will act when the data and price action tell us to act. (Mark Arbeter, CMT)