Core PCE Data Has Powell Pleased – May Set Tone For Q2

The Fed's preferred gauge of inflation was released today and, according to Fed chief Jerome Powell, "it was good," as there were no ugly surprises. This news could boost the markets, as sticky inflation data has had investors on edge amid interest rates that have remained relatively high. The stock and bond markets were of course closed today, however, so we won't see a response from traders until next week.

Overall, we're heading into next week on good terms, with the Dow, Nasdaq and the S&P 500 at new highs with small-cap stocks in an uptrend after posting an impressive 2.5%. In other positive news, we're continuing to see a broadening out of participation well beyond the Magnificent Seven stocks which dominated last year's top performance lists.

Daily Chart of S&P 500 Index

With so much bullish behavior, it may be difficult to determine where to focus your efforts so that you can outperform these strong markets. From my work, honing in on companies that have strong growth outlooks will always pay off, particularly during a bull market phase such as now.

Many of these faster-growing companies -- particularly in Technology -- have seen impressive returns year-to-date already, with consolidation phases needed before another leg up. Instead, I'm looking for stocks in areas such as Healthcare, which have entered a new uptrend after trending sideways over the past 3 weeks. While normally viewed as a defensive area of the markets, there's plenty of fast-growing companies amid the development of new drugs and medical products.

Daily Chart of Healthcare Sector (XLV)

A prime example is Eli Lilly (LLY) which was added to my MEM Edge Report's suggested holdings list in early January. In addition to the company's popular weight loss drug Zepbound, which was approved late last year, The company is on track to see their Alzheimer's drug approved next quarter.

LLY has been trending upward in a tight trading range in anticipation of this FDA approval, and this recent period of consolidation has allowed the stock to recover from an overbought condition during February. A close above its recent high of $800, coupled with a bullish MACD crossover, would put the stock into a strong buy zone.

Daily Chart of Eli Lilly (LLY)

Other newer areas are also beginning to emerge, and if you'd like to be alerted to new buy ideas in these areas, use this link here to trial my twice weekly MEM Edge report. You'll also receive in-depth information regarding broader market conditions as well as sector rotation that's taking place and why. I hope you'll take advantage of this offer!

Warmly,

Mary Ellen McGonagle

MEM Investment Research