John Mendelson
ISI Group
ISI Group’s John Mendelson, who climbs one rung to second place, “couples a strong traditional technical approach to the markets with a long memory of prior cycles,” observes one backer. “That kind of perspective is getting harder to find.” Mendelson has been studying the movements of leading benchmarks — the Bloomberg Cumulative Advance-Decline Line for NYSE Stocks, the Dow Jones Industrial Average, the Standard & Poor’s 500 Index, the Value Line Composite Index, among others — and finds that those with fewer components (the Dow, the S&P 500) are going up, while those with more constituents are going down. “You have a lot of obvious divergences, which is a sign that where we are right now is not a healthy market,” he observes. Thus, a relatively small number of stocks is having a disproportionate impact — in particular, big pharmaceuticals companies, a group that Mendelson says “is going to be one of the best groups over the next several years,” and such natural-gas companies as Houston’s Cabot Oil & Gas Corp. and Range Resources Corp. of Fort Worth, Texas. “If the market does correct, which is my view, you’re going to get some of these major gas stocks at a cheaper price,” he concludes.