21Nov 2022

Industrial Sector Review: 11/22/22

Monday|0 Comments

Small Buisness Optimism? To be certain I am far from an economist and have zero interest in becoming one. But it is widely known that small business is very important as they generate nearly all net job gains. When this segment of the economy is healthy it could be a good sign overall. Some companies have their pulse on this theme better than other and below is the chart of CTAS which I have closely followed in this regard. They are primarily a uniform play, however, do a multitude of services for small businesses. Again I am strictly a technician and therefore believe the PRICE action of a chart can tell you a lot about the industry it is in and also where it can be going. CTAS is essentially UNCH YTD but trading right off all-time highs and last week (up 1.2% as the XLI dropped .1%) bullishly digested the big 11/11 week-ending gain of 8.1%. At the expense of sounding like a broken record, we favor names that never went on to touch their June-July lows. This name could be ready to set up an add-on on the way UP with a bull flag, something the leaders very often do.

19Nov 2022

The Week Ahead: Starting 11/21/22

Saturday|0 Comments

Size Matters: As everyone looks to the direction of the greenback, interest rates, and crypto for signs of what the market may do next, could it be as simple as what the small caps do? Keep in mind this space tends to lead and remember how one of the most telegraphed breakouts in some time almost 1 year ago fell apart in rapid fashion. On the chart below one could see the very clean breakout above a flat base with the IWM jumping 6% the week ending 11/5/20. The saying goes "if it's obvious it's obviously WRONG" comes into play here. The ETF subsequently went on a 4-week losing streak falling by a combined 12%. It "led" in this situation too as the S&P 500 and Nasdaq did not start their descents until 3 weeks later (Dow fell roughly in line the same as the IWM). The point I am trying to make here is the IWM has been demonstrating some relative strength as the only of the 4 aforementioned benchmarks NOT to undercut their June lows. If they can break this string of lower highs that began at 220 to start 2022, could that be a sign that a real bottom is in, as they potentially "lead" to the upside here? A decisive CLOSING break above 190 next week could be the catalyst.

18Nov 2022

Consumer Sector Review: 11/21/22

Friday|0 Comments

Home Is Where The Heart Is: They say one's best investment they can make is their home. During COVID many upgraded their properties and a good indication of that was seen in the clever symbol POOL which ran from 160 in March 2020 to almost 600 last November. It has since retreated firmly and the chart of RH rose in a more robust fashion from 73 to over 730 between March 20'-April '21 (it was set back at the 300 number this month). Others that reported earnings recently in the arena include WSM and home improvement retailers like HD and LOW. Below is the chart of the ITB, a pure play homebuilder ETF, and it could be coming in to fill in a gap that completed a bullish island reversal from the 11/9 session in the near term. Obviously, they are interest rate sensitive and the group exploded higher on 11/10 up 11% after a "tame" CPI reading. The ETF is still 30% off most recent 52-week highs and if this fund can get back above its 200-day SMA promptly it would be a good sign for the overall group.

17Nov 2022

Consumer Sector Review: 11/18/22

Thursday|0 Comments

Earnings Deluge: This week has brought on an abundance of consumer names reporting numbers. Most thus far have acted well POST the release with some that were to me surprising. DNUT is inching above a bull flag pivot of 14.50 which carries a measured move to 18. TJX took out its own bull flag trigger of 72 which implies a move toward 82 into year-end most of which has not been accomplished. Remember though the measured moves are just guidelines and in fact on its WEEKLY chart is breaking above a cup base pivot of 77.45. M is trying to distance itself from the very round 20 number and its 200-day SMA as well in the process. BBWI which went from 5-80 between March '20-November '21 will attempt to break above the top end of the range between 30-40 from this summer. BKE, which REPORTS Friday morning, has traded between those same numbers and is sporting its own flag just above 40. Below is the chart of WMT which excelled this week and is higher by 4% heading into Friday.

16Nov 2022

Technology Sector Review: 11/17/22

Wednesday|0 Comments

O Canada: Our neighbor to the North is known for its energy reserves but within the EWC one would see it chock full of financials and rails. The ETF is on its first 4-week winning streak since the summer of 2021 and it has been trading between the round 30-40 numbers for 2 years now. The top holding in the fund is in the chart below of SHOP which is looking more attractive with this nascent pullback into a bullish inverse head and shoulders breakout. Volume has been superb and PRICE has cooperated since the bullish hammer WEEKLY candle the week ending 10/14 and the prior week recorded a doji candle which are adept at sniffing out possible changes in the prevailing trend. A prudent pause is now occurring after back-to-back 14% WEEKLY gains ending 10/21-28 and last weeks scream higher of 23%. On a WEEKLY basis, the round 40 number has proved tough to CLOSE above with 9 weeks above the figure since losing it the week ending 5/6 as just 2 CLOSED above it. Enter first on a pullback at 37 then add to above 42.

15Nov 2022

Technology Sector Review: 11/16/22

Tuesday|0 Comments

It All Started With Micron: The semis should be thankful for the chart below of "old tech" MU. Sometimes an old dog can teach new tricks. Since a double top near the very round par number dating back to April '21 and January '22 it was a pushover for lack of a better term. But starting in Q4 Micron started to demonstrate nascent leadership. In the week ending 9/30, in which it did not crater after an earnings report, MU was UNCH while the SMH slid almost 4%. The following week ending 10/7 more leadership with MU higher by 5.6%, nearly tripling the gain of 1.9% for the SMH. Then the very next week ending 10/14 with MU off just .4% and the SMH cascaded lower to the tune of 8.2%. Since then the SMH has outperformed but perhaps MU was providing comfort while the group gathered itself. The SMH advanced 3 of the last 4 weeks including last week up better than 15% and this week is tacking on another 2% so far. In the latest 13F filings both Viking and Seth Klarman added to their stakes. A big test here for the stock as it approaches its 200-day SMA while cutting into a bearish harami cross from early August.

14Nov 2022

Healthcare Sector Review: 11/15/22

Monday|0 Comments

Device Failure: The saying goes "never fall in love with a stock." It should be rented, as long as it is acting technically fine. That could be weeks, months, or years. As long as the catalyst that made you get involved still exists move the stops upward. Below is the chart of a former general in the medical equipment arena. STE was a robust performer that has been in an uptrend for almost the entire time since it came public nearly 10 years ago. That was until the week ending 4/22 recorded a nasty reversal at all-time highs, and it has been in a tailspin afterward. It has advanced on a WEEKLY basis just 14 times since then, and it has gone literally nowhere since the 22% combined loss the 2 weeks ending between 9/16-23, more than double the loss of the IHI. Technicians often like to mention that "nothing good happens below the 200-day SMA" and the longer it trades below there, the worse. There is no reason to be a hero on the downside until PRICE confirms below 160. Patience is a virtue.

12Nov 2022

The Week Ahead: Starting 11/14/22

Saturday|0 Comments

"If You Can Meet With Triumph And Disaster And Treat Those Two Impostors Just The Same" -Rudyard Kipling Monthly Nasdaq Confusion: That eloquent quote above hangs just above the entrance to the hallowed grounds at the All England Club at Wimbledon. It is meant to keep emotions in check, no matter what the outcome, on the tennis court at one of the most famous sporting venues under enormous pressure. Certainly, it could be applied to market participants who have tried to navigate this very difficult landscape recently. Huge highs and lows have occurred and in my opinion, it is not the healthiest of actions. Thursday the Nasdaq jumped 7.3% in very firm volume and give credit for Friday up another 2%. I was always taught that bottoms formed in a smooth, gradual fashion, not this wild volatile nature we are presently seeing. Perhaps it will end up being as simple as round number theory with the MONTHLY gravestone doji candle in November 2021 at 16000 as the top, and the spinning top candle at 10000 in October at the low. There is still 2 1/2 weeks left this month and a CLOSE above 11000 has to be viewed through a bullish lens. Call me skeptical but PRICE as always will let us know.

12Nov 2022

Healthcare Sector Review: 11/14/22

Saturday|0 Comments

Biotech Rebound? Markets always do their best to confound the most and the move from the biotech sector to end last week was powerful, despite the red wave that never quite materialized. Of course, a rising tide that occurred last Thursday lifted nearly all boats, but the XBI cleared a key area of resistance in the 200-day SMA. It could prove to be a bull trap as it did for a brief period in early August but give PRICE action the benefit of the doubt. Is it a sign of "risk on" in the healthcare sector coming back? Or is growth attempting to make a stand against value? Some of the big pharma names did not follow through Friday with stocks like MRK LLY and BMY dropping in the 4% neighborhood. Biotech names that continue to behave bullishly include AMGN which rose 5% last week and a gap fill from the 11/7 session should be viewed as an opportunity. Another chart that has caught my eye in the overall healthcare space is ISRG. It has advanced 18 of the last 23 sessions with 3 of the last 4 weeks up by double digits and CLOSING near the top of their WEEKLY ranges. Look for a move to the very round 300 number into year-end which would fill an upside gap from the 4/21 session after its robust bull flag breakout Thursday.

10Nov 2022

Industrial Sector Review: 11/11/22

Thursday|0 Comments

Perking Up: The 11 major S&P sectors are beginning to see a slight shift regarding strength. Below is a look at all of them over the last one month period. We know October was a very kind month to overall markets, and investors are wondering if the mid-term election seasonality will start to put at least a tactical bid under stocks. One can see the thirst for value-oriented groups, and the industrials are leading the way, along with materials, financials, real estate, and energy being the fifth best actor of the bunch (is that a sign of new leadership forthcoming or a market about to lose its general thus far YTD?). Every subsector within the XLI is higher over the last month and the laggard is waste management plays, the very group that was leading early on in 2022. Rotation inside is a healthy thing as it gives former stalwarts a chance to catch their breath. Diversified industrials have been the ruler with names like HON and GE up between 20-30% over the time frame. The XLI is looking for its fourth straight WEEKLY gain with the last 3 all CLOSING at or very near the top of the range. Will par halt its progress as it did in August, an area of former support for a year-long period between April '21-April '22?

9Nov 2022

Industrial Sector Review: 11/10/22

Wednesday|0 Comments

Consulting Winners: The business support services group inside the industrials has been a strong one. CSGP is trying to stay above a recent breakout above a cup base pivot of 79.36 taken out on 10/26. That was its third consecutive well-received earnings reaction up 7.4% (the 2 others jumped 6.2 and 14.8% on 4/27 and 7/27). FIX is an underfollowed name that is still comfortably above a 109.10 cup base trigger it took out on 10/25. If the thinly traded name can remain at this altitude an add-on above a bull flag formation is in play. Below is the chart of another standout in BAH. The stock is up 30% in 2022 thus far, not a typo, and sports a dividend yield of 1.6%. On its WEEKLY chart, it had the look of breaking above a bull flag pivot that was just below the very round par number and this week is demonstrating good relative strength up almost 3% as the XLI has added .5%. The daily chart here needs a decisive push above 110 to get this uptrend in full gear once again. Respect a leader in an overall chilly market climate.

8Nov 2022

Technology Sector Review: 11/9/22

Tuesday|0 Comments

Large Cap Affinity: There has been an ongoing shift within technology to more mature names. Obviously, that is not the case with stocks like MSFT GOOGL META, and AMZN. Even AAPL is starting to feel heavy and it is the only one that never undercut the 10/13 session lows which were very positive with almost everything recording a bullish engulfing candle. Select "old tech" plays like ORCL that are catching some love. SANM jumped double digits Tuesday and registered its FOURTH straight positive earnings reaction (and now 9 of the last 11). Below is the chart of German software play SAP which has advanced 5 of the last 6 weeks and the lone decliner last week still CLOSED in the upper half of the WEEKLY range. It is still 34% off the most recent 52-week highs and is approaching the very round par number, which has been influential in the past. Tuesday recorded a spinning top candle after a quick 20% jump and CLOSED just above its 200-day SMA. If one was fortunate enough to catch this ride it would make sense to take some off the table.