‘No better indicator’ for bullish sentiment than piece of economic data due out this week

One portfolio manager is keeping a close eye on the capital goods orders report due out on Friday before the opening bell.

There will be no better indicator than this report of whether a strong stock market is reflective of a relatively strong underlying economy, said Kevin Caron, portfolio manager at Washington Crossing Advisors. Here are his reasons, along with an investment recommendation for 2018.

• For the most part, the market is seeing an improvement in sentiment around emerging markets and global growth.

• There is broadly less concern about low energy prices causing disruption within the credit market.

• These factors, along with the fading of deflationary fears, have aided in stabilizing the economy and have given investment spending a boost throughout most of 2017.

• Heading into the new year, investors should consider value equities, as stocks' valuations have become somewhat stretched.

Bottom line: The capital goods orders report due out on Friday may confirm the bullish sentiment seen in the stock market.

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Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

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