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Industrial Sector Review: 5/31/22
Defensive Aspirations: They say in sports defense wins championships. Well inside the industrials defense is best in breed and leading the way thus far in 2022. Below is the ratio chart of the ITA compared to the S&P 500 and it demonstrates its superiority. The ITA is down 6% YTD, while the XLI is 9% lower, and it is acting a tad bit better as it trades 9% from most recent 52-week highs and the XLI is 11% off its annual peak. The top holding in RTX just bounced off the very round 90 number which doubled as 200-day SMA support. The second-largest component in LMT Friday just broke above a double bottom pivot of 449.68. Both of these stocks gained ground every day last week. Now contrast that with the 3rd largest holding in BA which is still 49% off heights made last June. In April the stock advanced just 4 sessions. Others in the group that are lagging include KTOS, whose chart sports a bear flag. AXON has been holding the very round par number recently and has roughly traded between 100-200.
Technology Sector Review: 5/27/22
Round Number Relevance: In our Tuesday Technology Note, we looked at the possibility that GOOGL was going to witness a bounce at the very round 2000 number. It was thrust into that area on the back of the ill-received earnings reaction from SNAP. At the moment that swoosh lower looks like it was an opportunity. Looking at the group as a whole via the major S&P sectors, technology is still firmly underperformed with the XLK down more than 20% YTD and just the ninth best of 11. But earnings reactions are starting to show resiliency, with SNOW and NVDA acting decently following Wednesday's aftermarket debacles. The SMH is higher by almost 4% this week thus far, which would be one of its best WEEKLY showings in 2022 so far. Below is the chart of the QQQ which is right back to the very round 300 figure, a level that was resistant in mid-2020, and support in early '21. Was the recent move below a bear trap from the 300-400 range? We will soon find out as it is right there at the CLOSE of trading Thursday.
Technology Sector Review: 5/25/22
Round Number Rescue: Monday afternoon witnessed an ill-received earnings report from SNAP which saw the stock Tuesday sliced by a more than a whopping 40%. This selling spilled over into "ad" peers, rightly or wrongly, although we know PRICE is always right and makes little sense to argue with it. Names like FB dropped 7% in sympathy with the stock filling in a gap from the 4/27 session, from earnings. TWTR, like FB, which is 50% off most recent 52-week highs slipped 5% as it looks to be breaking below a bear flag pattern, but the stock is in the middle of possible litigation of a Musk takeover. PINS gave up a quarter of its value alone Tuesday, and below is the chart of GOOGL. Perhaps this is the name that many feels were "undeservedly" brought down by the SNAP debacle. It is acting "better" than others spoken of in this paragraph now down 31% off most recent 52-week highs. I think this could be a good risk/reward situation on the long side as it trades toward the lower end of the range between the very round 2000-3000 figures.