Returns for our weekly best scoring by market cap:  Buy and Hold 1 Year, 0% turnover

• The best sector is industrial goods

The best sector is industrial goods (AGCO, BA, IR, AVAV, MIDD).  Consumer goods (FOSL, GNTX, FLO, GM, TAP), financials (PSA, NDAQ, CINF, HBHC, AFL) and services (TRN, DXPE, OUTR, OCR, KSU) also score above average.  In financials, buy large and small cap rather than mid cap and in services tilt buys toward small cap.
 
Healthcare (SIAL, ANGO, UTHR, JNJ, BDX) scores in line; concentrate on large and mid cap instead of small cap.
 
Technology (VRSN, MTD, MEI, OTEX, ACXM), basics (ZEUS, CMC, CF, MON, OXY) and utilities (EQT, LG, CNP, EGN, AES) remain below average.  In technology, large cap is a better play than mid and small cap.
 

The following chart visualizes score by market cap and sector.
 


This next chart shows historical moving average universe scores for 4, 8, and 12 weeks.  It also overlays the universe average score alongside the SPX.
 

The following table updates earnings beats by sector.  On average, large cap healthcare, mid cap consumer goods, and small cap technology have been best at over-delivering earnings over the past four quarters, while basics have struggled.
 

Industrial Goods
 

Industrials remain the top scoring sector as managers become increasingly hopeful regarding recovering European demand.   The UK and Italy are showing signs of improving economic activity, with the UK recording its 2nd consecutive month of rising industrial production.  Germany and France appear to be handing the baton.  Among the top scoring in industrials are aerospace/defense (BA) and construction related companies (X, TREX, TEX).  U.S. airline consolidation provides stronger balance sheets and global travel projections suggest Boeing and Airbus will continue to increase production rates to work down record backlogs -- bullish for suppliers (AIR, CW) again in 2014.  Construction spending remains uneven, but hotel, office, and manufacturing construction remains positive and should accelerate next year as bank lending gets more aggressive and developers seek to take advantage of low rates before they move higher.
 

Consumer Goods
 

Across consumer goods, textiles (NKE, DECK) and auto parts (BWA, GNTX) offer upside heading into 2014.  Textiles benefit as normalized clothing and apparel inventory supports production growth and holiday deals drive inventory turn.  Footwear is particularly strong scoring.  Auto parts continue to offer upside on emerging markets auto sales growth and ongoing higher domestic market sales.  European demand is showing early signs of recovery, with YoY passenger car registrations up 4.7% in October.
 

Financials
 

Asset managers (AMP, PJC) are among the best scoring across financials as fee revenue benefits from equity market appreciation and rotation out of lower revenue generating fixed income into equities.  Regional bank (ASBC, HBHC) income growth will remain driven by loan growth in 2014 as C&I strength migrates to consumer loans.
 

Services
 

Strength in services is spread across industries.  The fourth quarter is best for staffing (RHI, MAN) industry demand, supporting the basket through reporting season.  Rails (TRN, CSX) also remain solid, driven by robust intermodal activity and growth in both oil/products and motor vehicles.