27Oct 2020

Healthcare Sector Review: 10/28/20

Tuesday|0 Comments

Small Cap Glory: In recent times we have seen small caps start to show some strength. The IWM rests 7% off most recent 52 week highs, but the index last Friday completed a bullish 3 week tight pattern, with the weeks ending 10/9-23 all CLOSING within just .72 of each other. If we drill down more into small caps in the healthcare arena, the PSCH has been acting well. The chart below shows good action POST breakout above a double bottom breakout pivot of 132.42 taken out on 10/5 jumping 3%, and we know the best breakouts tend to work right away. The ETF sits just 3% off most recent 52 week highs, while the XBI and PPH trade 4 and 11% off their most respective yearly peaks. Trading the fund itself would involve a lot of slippage due to low daily trading volumes, but some holdings in the fund look attractive. Top holding NEO is filling in a gap right near a prior breakout above a cup base trigger of 41.13. MMSI has completed a handle on its cup base just below the very round 50 number, and it reports earnings Wednesday.

26Oct 2020

Consumer Sector Review: 10/27/20

Monday|0 Comments

Staples Dilemma: Bears always seem to be under a microscope, and they should be as the market has an overall positive, bullish bias. Looking at comparisons of how certain groups have behaved against each other, it is a good way to view where one should deploy their capital. Below is the ratio chart comparing the consumer staples to the consumer discretionary space, and it paints a very bearish complexion for the former. Remember ratio charts just show how one group or stock is acting better or worse than the other. It does not mean that both are not trading well, just which one may deserve your money. One can see the bullish wedge forming in the staples favor, but any strength emanating from a break above the pattern would most likely be transitory. Over the last 6 months the XLY has been the BEST performing major S&P sector of 11, up 33.6%. During that time period the XLP rose 14.1%. What was telling to me, was the fact that over the last one month period I would have thought the more "defensive" staples would have been strongly outshining discretionary. That belief was incorrect with the XLY up 3.8%, compared to the XLP up 2%. This is why I think one can ride out this storm within discretionary.

23Oct 2020

Technology Sector Review: 10/26/20

Friday|0 Comments

Confusing Composite: Many interpret a healthy bull market with an abundance of participation from the vibrant technology sector. It gives a "risk on" flavor as investors search for capital appreciation. The Nasdaq has been sending mixed signals. Over the last one month period tech, as measured by the XLK, is just the seventh best major S&P sector of eleven. The index should be given the benefit of the doubt as long as it remains above its 50 day SMA, but its leash is getting tighter. A potential handle on a cup base that began on Monday 10/12, is looking more like a potential double top at the round 12000 number, and notice on the chart below that 10/12 session traded into a bearish doji candlestick at all time highs recorded on 9/2. That type of candle often foreshadows a change in the prevailing trend, and thats just what it did with a 1600 handle decline in a rapid 9 of 12 day losing streak. Question now has its "time served" been enough? Next week is crucial as this elongated handle is becoming more faulty by the day. Obviously the benchmark is hesitant with a looming election. Keep it simple, and remain mildly bullish as long as we float above 11300. A CLOSE underneath that number and all bets are off.

22Oct 2020

Financial Sector Review: 10/23/20

Thursday|0 Comments

Hated Enough? When sentiment within a sector becomes too negative, it could be a sign that things will eventually change. Of course in my opinion the only way to truly gauge that is through affirmative PRICE action, and looking at each individual name on its own merits. The XLF deserves to be in the doghouse, as BRKB, the top holding in the XLF, is now looking to complete the right clavicle in a bearish head and shoulders pattern, and a move below a neckline pivot of 205 carries a measured move to 187 (its 200 day SMA has been sloping lower for one year now). The second largest holding with the fund is JPM, and it currently trades 27% off most recent 52 week highs, and to be frank has held onto the very round par number well. BAC is trading below both its 50 and 200 day SMAs, and rounding out the top 10 would be another weakling in WFC which is 58% off its most recent yearly peak, and it has formed a bear flag formation after this week has done nothing in the way of rectifying last weeks cratering of nearly 10%. This action has cast a pall over some names within the arena, that could provide some attractive opportunities.

21Oct 2020

Industrial Sector Review: 10/22/20

Wednesday|0 Comments

Truckers Delight: We are all aware of the special action in the delivery services plays like FDX and UPS, and other modes of transportation have been acting well too. Consider the rails, which had a rough day Wednesday, but overall leaders remain within close distance to all time highs. KSU could be in the process of attempting to build the right side of a cup base that was halted precisely at the very round 200 number, and it was one of the only names in the group to advance today, albeit fractionally. The airlines have been obviously under pressure, with one of the only charts in the space with a decent complexion being RYAAY. Below is the chart of a trucking general in ODFL, which like other industrials seems to be pausing, and hopefully refreshing, near the very round 200 number. Peer J is having issues with the very round par number, as it was above 100 intraday 6 consecutive days between 10/12-19, with just one CLOSE above (it now sports a bull flag formation and a finish above par carries a measured move of 10 points higher. Back to the truckers, and CHRW is another member of the field that seems to be held back stuck in rush hour traffic currently at the very round 100 figure.

20Oct 2020

Healthcare Sector Review: 10/21/20

Tuesday|0 Comments

Equipment Check: As the biotech group begins to take some water onboard its ship, with the XBI down more than 3% already this week, some focus has turned to the steady, seemingly reliable medical equipment names. Below is the chart of the IHI, and it has handily outperformed the XLV on both a YTD and one year look back period. The IHI has gained 18% YTD and 27% over the last one year period, while the XLV has risen by 5 and 16% over the same respective time frames (of course the XLV has a bigger dividend yield at 1.9% compared to the IHI at just .3%). Leaders within the equipment arena include a STAA, which has exploded this week breaking above a 61.96 double bottom pivot on Monday. It has screamed higher by more than 18% this week already, as its first 4 week winning streak in 14 months looks assured. Three of the last 6 weeks with NVCR have been double digit gains, as a bull flag takes shape, with a move above the round 140 number buyable. SWAV has recorded nearly a double from just the July lows, and a pullback toward the upward rising 50 day SMA should be taken advantage of on the long side. 

19Oct 2020

Consumer Sector Review: 10/20/20

Monday|0 Comments

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%.

16Oct 2020

Technology Sector Review: 10/19/20

Friday|0 Comments

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?

15Oct 2020

Industrial Sector Review: 10/16/20

Thursday|0 Comments

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.

14Oct 2020

Healthcare Sector Review: 10/15/20

Wednesday|0 Comments

Biotech Pause?  As an unlikely group gains strength heading into an election just weeks away, investors are taking notice. Both the XBI and IBB trade just 2 and 3% off their most respective recent all time highs, and the former was above a cup base pivot until Wednesday, and the IBB stalks a cup base trigger of 146.63. The week is now half way finished and one has to be somewhat impressed so far with the XBI, basically UNCH heading into Thursday, AFTER a 9% gain the prior week. The last powerful WEEKLY advance of 11.3% week ending 9/18, was followed by a WEEKLY loss of 4.7%. Names that are contributing to keeping this group moving north are TWST, on a current 4 week winning streak that rose by a combined 38%, and this week has added almost another 1% thus far. CRSP which jumped more than 22% last week, is up another 3% heading into Thursday, and it CLOSED above the very round par number Tuesday, but Wednesday reversed very hard recording a bearish shooting star candle. A cup base pivot of 105.22 can be added to with a CLOSE above the pivot (was well above intraday Wednesday).  

13Oct 2020

Technology Sector Review: 10/14/20

Tuesday|0 Comments

AMD Ankle Weights? Acquisitions are a big deal. For the most part they are a sign of confidence as major corporations which often do deep due diligence, believe that stocks are cheap. It is a good sign for the overall market as well, as we have seen M&A activity in a diverse group of sectors recently. In healthcare we have seen MYOK and IMMU taken out. In finance MS is buying EV. Within technology we have seen a precedent for the recent AMD liking for XLNX, with the ADI play on MXIM, back in mid July. ADI announced the move on a Monday, as they usually occur, and slumped nearly 6% that session. For most of the last 3 months it traded sideways, essentially "dead money" as investors dealt with opportunity cost watching peers soar higher (interestingly MXIM filled a gap perfectly on 9/25 from the 7/10 session). It did find support at its 200 day SMA and now looks to be on the verge of breaking above a cup base pivot of 127.49. Will the sideways action in ADI somewhat rhyme with AMD going forward? Most likely unless XLNX declares they are not for sale. In any case AMD may have showed were they are weak in certain segments of the space. There may be better opportunities within. 

12Oct 2020

Consumer Sector Review: 10/13/20

Monday|0 Comments

Consumer Thrill: The discretionary sector in sandwiched between two technology groups, up a very healthy 25% YTD. Finishing second best should be no disappointment, and in fact should be celebrated. The breathtaking 300 handle move in AMZN in just the last two sessions alone has really given the XLY a super charged boost. We are all aware of the ongoing strength in some larger cap plays like NKE and TGT, but there are some names that were considered in the lower rung of the barbell approach, that have declared themselves true leaders. They include GPS, although it may have some issues with the very round 20 number. BBBY has seems to be getting comfortable above that same figure. GOOS has added nearly 50% alone during a 7 week winning streak, but in my opinion the 3 aforementioned names still need some proving to do. Other real generals are CROX which is trading between the round 40-50 numbers for the last one month. EBAY PENN and DKNG deserve to be in the conversation, even with the last 2 encountering some most likely temporary troubles the last week or so. The chart that summarizes the entire group below in the XLY is thriving.