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Consumer Sector Review: 10/20/20
Smaller Advantages: As in life, with stock markets sometimes it is helpful to be smaller in stature. It is easier for a smaller cap company to maneuver, as it has the advantage of agility, unlike a mega cap supertanker that takes a long time to adjust. Of course scale matters, but some smaller names have taken on the challenge against an AMZN, or at least some of the charts, and PRICE action, are saying so and that is all that matters to us. Many of these names reside in the XRT, a more "equal weight" consumer ETF. It trades right at a cup base breakout pivot, and to be frank we would like to see it accelerate higher from here a bit faster, as we know the best breakouts tend to work right away. Another smaller analogy regarding something special to me is in tennis. The shorter, more nimble player is faster and normally able to run down lots of balls, eventually wearing out the taller, less "athletic" player that will have trouble generally with his or her mobility. Perhaps the best thing for the ETF this week would be if it can CLOSE very taut to where the last two did, and form a bullish 3 week tight pattern after the weeks ending 10/2-9 added a combined 10.3%.
Technology Sector Review: 10/19/20
Reluctant Nasdaq? They saying goes it is not where you start but where you finish. Regarding markets that quote rings true, and Friday began relatively firm, and CLOSED limp, about 150 handles from intraday highs. For the week the Nasdaq rose .8%, not a bad showing given the prior week jumped nearly 5%. On the WEEKLY chart it can be interpreted as a double top right at the very round 12000 figure, with this weeks highs testing the top on the intraweek high the week ending 9/4. An even more bearish was the fact that that very week had a very wide range of 1200 handles, or 10%. That type of expanded range has been known to mark tops. However on the DAILY chart below, it sports a classic cup with handle pattern, and has shaped just like bulls would want it too. Trade has been somewhat taut, and the handle formed in the upper half of the cup base. Bulls also have another positive up their sleeve with the last 3 Mondays being up powerfully by 1.9, 2.3 and 2.6% on 9/28, 10/5 and 10/12 respectively. Next week will be critical in my opinion, and are investors becoming apprehensive with the nearing election?
Industrial Sector Review: 10/16/20
Industrial Fortitude: Although the industrial sector is up just 1% YTD, it is gathering momentum. It is often categorized in the "value" arena, which has been a trap for years, but some nascent strength is beginning to make its presence felt. Over the last 3 month period the XLI is the second best major S&P sector out of 11, up more than 13%, even edging out technology. Durability in the group is often interpreted as economic firmness, and the sub sectors within that helped the most over the last 3 months were delivery services and heavy construction. FDX and UPS are higher by 75 and 47% respectively in the time frame. FDX is up nearly 4% this week so far and if that holds tomorrow would be a 12 week winning streak. Are investors anticipating a big infrastructure package regardless of who wins the election in a few weeks? That has been a let down time after time with those forecasting such a development, but PRICE action with PWR and ACM are speaking volumes. As Thoreau stated, "its not what you look at that matters, its what you see." If investors are not seeing anything but probable strength with the 4 names mentioned going forward, they probably have a strong bias.