Industrial Strength:
We know the vast majority of a stocks movement is directly tied to the sector it hails from. Find a top performing group and purchase the best of breed names. The industrial space would be an area to dedicate your attention now. The XLI sports the best YTD return thus far in 2019 among the 11 major S&P sectors (sizable advantage by more than 3 percentage points over 2nd best energy group). Rails have been a big contributor to the overall move, and thats a good sign for the economy as goods are being transported (UNP and NSC trading near all time highs). All aboard.
Losing RedHeaded Stepchild Status:
Contrasting ing big names on ratio charts, is a good way to illustrate which stocks the market is deploying capital too. Today we look at the relationship between UPS and FDX. The former has been a notable out performer compared to FDX. UPS is peeking its head above its 200 day SMA here, while FDX still lingers 40 handles below the long term secular line. Many like to play the mean reversion game, but we prefer to buy strength and sell weakness. UPS now sits 11% off most recent 52 week highs, while FDX trades 32% off its own. The dividend yield is also more attractive with UPS at 3.4%, and FDX at 1.4%.
Examples:
We mentioned yesterday that stocks in the consumer space that have exposure to the housing group have witnessed a rebound. Today we highlight a name from a different group, the industrials. Below is the chart of LPX and how it appeared in our 1/30 Industrial Report. Like many stocks it began a nice, gradual bottoming process, an ideal scenario. It has since broke above a bullish inverse head and shoulders and has now recorded consecutive six CLOSES above its 200 day SMA.