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Consumer Staples Sector Review: 1/21/20
Defensive Posture? Give the consumer staples group a bit of acknowledgment as over the last one year period, they are the fourth best major S&P sector performer, higher by nearly 27%. That should be commended, as this group is prone to pay decent dividend yields and offer market participants at nice potential capital appreciation. Of course the group will have its fair share of leaders and laggards. Pepsi, for one registered one of its best weekly gains in one year, advancing 5% and bursting above a 140.55 cup base pivot. Kellogg which pays a yield more than 3% has gained 10 of the last 12 weeks, and is approaching a WEEKLY cup base trigger in a pattern 16 months long. Estee Lauder, seemingly a perennial winner, has added 75% over the last one year period. To be balanced the ratio chart below shows how it has not been able to cooperate in the same manner the S&P 500 has. Do not let that deter you from sifting through some nice names in the space.
Technology Sector Review: 1/17/20
Amazon Effect: As we know the internet behemoth is the largest component in the consumer discretionary ETF, the XLY, at nearly one quarter of the fund. It has been newly labeled a consumer name, but this is really a big part of technology. It is the fourth largest holding in the Nasdaq, at 5.6%, and therefore obviously has a big influence on the index. The chart below is an interesting one as it builds the right side of a cup base, and has just recently put on a handle on the pattern too. It sits 8% off most recent 52 week highs, which aligned roughly with the very round 2000 number. The positive signs include the huge move on 12/26/19, jumping almost 80 handles, and breaking above its 200 day SMA, a line that met resistance three times between last October-November. Give the base credit too as the handle is forming in the upper half of the pattern as well. To be balanced it has been trading a bit wide and loose, and that what makes a market. The only thing that matters in the coming weeks is a CLOSE above the cup with handle pivot, as PRICE supersedes all other indicators.
Healthcare Sector Review: 1/16/20
Pharma Takes The Baton: There seems to be endless conversation about the growth/value correlation. Chatter that declares value should start outperforming growth has fallen on deaf ears for the most part. If that were to take place, one area where it could materialize is within healthcare. Below is the ratio chart comparing pharma to biotech with the PPH:XBI (PPH is an illiquid instrument but gives a good representation of what is happening). Pharma still has some work to do according to the chart below, but on a YTD basis, obviously a small sample size, the PPH is up double what the XBI is. Wednesday the PPH rose 1.7%, AFTER Tuesdays rise of 1.8%, and it is moving robustly away from a bull flag breakout above a 64.50 pivot. We know the best breakouts tend to work right away, so this is a very positive development. Top component BMY itself has broken away from its own bull flag above a 64 trigger too, and LLY has lost ground just ONE day this year so far. PFE, which rounds out the top 3, did fill in an upside gap from the 7/29/19 session, so it could take a breather here.