General Dynamics is a defense contractor and business jet manufacturer. The firm’s segments include aerospace, marine, combat systems, and technology. General Dynamics' aerospace segment manufactures Gulfstream business jets and operates a global aircraft servicing operation. Combat systems produces land-based combat vehicles such as the M1 Abrams tank and Stryker armored personnel carrier, as well as munitions. The marine segment builds and services nuclear-powered submarines, destroyers, and other ships. The technologies segment contains two main units: an IT business that primarily serves the government market and a mission systems business that focuses on products that provide command, control, computing, intelligence, surveillance, and reconnaissance capabilities to the military.

There's a lot to like about the stock market right now, and it has been fairly easy to ride the current wave higher. Multiple sectors and industries are participating, and broad mega-cap indices continue to crawl higher. It's starting to feel a little too easy -- and when we get that feeling, sometimes volatility is just around the corner. Forget your bias, leave your opinions at the door (and pick them up when you leave the office for the day), and focus on price! Some have suggested that the Nasdaq 100 (QQQ) is diverging from the S&P 500 (SPX), noting that the QQQ has not made a new all-time high. But during the July to August 5 pullback, the SPX fell 8.5% while the QQQ dropped 13.5%. Since those lows, the QQQ is slightly beating the SPX. Obviously, if you drop more, it normally can take more time to recover. There has been some loss of price momentum in the major indices, as the 10-day rate-of-change (ROC) has traced out two lower highs since the peak on August 19. For the QQQ, daily momentum has failed to cycle into overbought territory since the momentum low in early August, while the moving average convergence/divergence (MACD) histogram has traced out two lower highs. In addition, the most-recent QQQ high was barely above the prior high in late September and could be a truncated fifth wave of a five-wave advance since August 5. Certain sentiment indicators remain stretched, including the five-day CBOE equity-only put/call ratio. As well, the 21-day is just starting to turn higher. It these continue, they may be good sell signals. (Mark Arbeter, CMT)

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.

Many in the investment world seem more focused than normal on what has happened historically in the equity markets on a seasonal basis, likely spurred by the pending presidential election. But such an exercise depends on what study one looks at, how far back the data goes (watch out for cherry-picking), and what year is examined within a four-year presidential term. Yet end of day, market returns have been pretty consistent over the years, regardless of whether the performance is measured in months, weeks, or even days. How can this be? There are a couple of structural reasons. There are times during the year when there is an influx of money into the markets; this generally helps the early part of the year and also late in the year, as investors fill up retirement funds early on and big wigs invest juicy bonuses as the year ends. Meanwhile, the U.S. economy used to be heavily weighted toward manufacturing, with companies susceptible to making various mistakes with inventories. Today, much of the consumer economy is in services, so those cycles have faded to some degree. Ultimately, many market studies have a bullish bias as the long-term returns are skewed to the positive side; after all, the market rises something like seven out of every 10 days. This year, many were worried about historically weak September, especially the last two weeks -- but so far, that fear has been a bust. One consistent historical event has been weakness in October during a presidential election year. We can't get around that, but the eventual election outcome has a lot less impact on financial markets than most believe. (Mark Arbeter, CMT)