7May 2021

Energy Sector Review: 5/10/21

Friday|0 Comments

Services Skyrocket: Last week in our energy note we drew up a ratio chart of the XOP against the OIH, and we pondered if it was a double top for the exploration names against the equipment. If this week was any indication, that double top will be long lasting and equipment should outperform. This is not a knock on the XOP. This is just an under-owned overall energy space, and both are on fire. Remember ratio charts compare one instrument to another and gives an assessment of which should be overweighted against the other. It does not mean one is weak, in fact, both are very deserving of your capital. This past week the OIH screamed higher by 19%, its best WEEKLY gain since the week ending 6/5/20 (the next 3 weeks gave that entire move back). The XOP was no slouch either jumping 8%. The good old days of SLB HAL and NOV are back. The latter name has jumped 40% since 4/21. Any pullback in these names should be taken advantage of.

6May 2021

Consumer Sector Review: 5/7/21

Thursday|0 Comments

Consumer Apprehension: When it comes to the 2 retail ETFs there is really no comparison. The XRT or more "equal weight" fund with no single holding of more than 1.3% has advanced 46% YTD and by 158% over the last one-year period. Compare that to the top-heavy XLY, where nearly HALF of the ETF is made of from its top 3 holdings in AMZN TSLA and HD. Of course, Amazon reported earnings, and was up about 4% after hours last Thursday, before CLOSING Friday in the red, with a bearish engulfing candle at all-time highs. Last week's highs to lows Thursday morning was a range of 300 handles. TSLA is now 26% off most recent 52 week highs, and HD has been acting stellar breaking above a bull flag. The softness of AMZN and TSLA is showing in the returns, although likable, up 9% YTD and 55% over the last one-year period, it pales in comparison to the XRT. If one is trading the ETFs I prefer the XRT as it is just below a bullish ascending triangle pivot, while the XLY has the look of a bull flag, that aligned with the round 180 number, which is getting long in the tooth.

5May 2021

Industrial Sector Review: 5/6/21

Wednesday|0 Comments

Industrial Influence: The industrial group, via the XLI, is now the 4th best major S&P sector performer on a YTD basis. The ETF is higher by more than 17% in 2021, and it has been helped primarily by heavy construction with the anticipation of an infrastructure bill, which truth be told has fallen on deaf ears. For the week the fund has advanced by nearly 2%, and if it ends the week on a positive note it will register a 7-week winning streak. The prior 6 weeks all CLOSED at the top of their WEEKLY ranges, and in fact, all WEEKLY gainers since the beginning of last December have done so as well. Some names within the group that look like they are ready to accelerate higher are GVA, and Wednesdays break above a bullish ascending triangle pivot of 41 carries a measured move to 48. ACM is edging above a bull flag pivot of 68, which would carries a measured move to 76. CRH, an Irish materials name is flirting with the very round 50 number here. The group seems to be firing on all cylinders at the moment.

4May 2021

Technology Sector Review: 5/5/21

Tuesday|0 Comments

Tech Wreck On Deck? Technology is no doubt the focus of all investors. Semiconductors and software garner most of the attention, and they are feeling the pain at the moment. Remember every company is either a technology company in some capacity, is trying to become one, or does not know the benefits of doing so. Since 2007 on the chart below, surprisingly it was never the best major S&P sector performer in back-to-back years until 2019-20. Information technology must be given credit for only one down year in the last 14, in 2008 when it plummeted more than 43%. Taking a closer look curiously it either participated in a big way (four times information technology was the best major S&P sector actor on a YTD basis since 2007) or never finished second or third best. The year of 2021 seems to be doing just that, with an even less than mediocre performance up just 5% YTD, besting just the consumer staples group. Prudent pause for an extended period of time, perhaps into year-end, looks like best-case scenario. 

3May 2021

Financial Sector Review: 5/4/21

Monday|0 Comments

"No Bull Market Without The Banks" Bull$#@!? The old adage is in my opinion not relevant anymore. Sure we would like to see their inclusion in any market rally, but it is not necessary. Going back some years, the banks were a big reason for the selloff, as the S&P 500 rose just 3.5% in 2007 and fell 38.5% in 2008, the financial group were the worst major S&P sector performers down 18.6 and 55.3% respectively. But just like anything else once something becomes widely known, its edge disappears. A good example would be last year when in 2020 the S&P 500 rose 16.3%, but the XLK fell 1.7%. This year so far give the XLF credit as it is the second-best major S&P sector actor, advancing 24%. Is it a signal that market participants believe rates are going higher? Of course, no one knows for sure, the only evidence I follow is PRICE action. The group will be helped further along with a break above a 356.95 cup base pivot for GS. Remember that will aid not only the finnies, but the DOW too as the index is price-weighted, and Goldman is the highest PRICE name in the benchmark. 

30Apr 2021

Consumer Sector Review: 5/3/21

Friday|0 Comments

Taking Different Routes: The top two holdings in the XLY veered off in different directions on Friday. The end of the week displayed some interesting action within the top-heavy retail ETF. AMZN and TSLA are the only double-digit percentage components in the fund and the former recorded an ugly intraday reversal with a bearish engulfing candle on Friday. It CLOSED nearly 90 handles, off highs for the session. This is a rather myopic look, but the chart below of TSLA refused to give any ground and CLOSED near highs for the daily range on a depressing tape. Notice it was another higher low and a bullish engulfing candle that CLOSED above both its 50 day SMA and a prior break above a bullish ascending triangle pivot of 700. The last time it went on a powerful price run following a bullish engulfing candle at the round 600 number on 3/30. Make no mistake about it AMZN is the better acting stock at the moment, just 2% off all-time highs. TSLA is still in bear market mode off 21% from a peak made in late January. With TSLA however, you now have a clearer stop to play against, the devilish 666 figure, Friday's intraday low.

29Apr 2021

Energy Sector Review: 4/30/21

Thursday|0 Comments

Equipment Check: The energy space continues to put on a solid display of "leadership" in 2021. I put that in quotation marks since many would question that "dubious" command. Often investors like to see strength in technology or consumer discretionary. The overall energy space still has a single-digit representation in the S&P 500, which traditionally is in the mid-teens, so there is plenty of room for the space to move higher. The XLE on a YTD basis is still the best performing major S&P sector up 35%, maintaining a double-digit lead over the second-best actor in the financials. Like any other group, there will be some bifurcation within, and that is illustrated by the ratio chart below comparing the XOP to the OIH. Presently the OIH is 17% off its most recent 52 weeks highs, while the XOP is 10% off its own peak made back last month. The XOP is above its 50 day SMA, while the OIH is not, and on a YTD basis the XOP has advanced 41%, nearly double that of the OIH (OIH has a larger dividend yield of 4.1% compared to XOP at 2.1%). Many may be looking to play mean reversion, but let PRICES confirm that first. If anything one can own both as a "barbell" approach.

28Apr 2021

Healthcare Sector Review: 4/29/21

Wednesday|0 Comments

Biotech Buzz: Arguing with PRICE is an expensive endeavor. Of course, it is not infallible, but it is what we are judged upon, and how we are paid. Almost always one will be humbled by it, if one fails to listen to the message it is saying. It is not crystal clear as we know the markets try to confound the most. And presently that is best described by the biotechs. In the last one month period, it has bobbed above and below its 200 day SMA, as stops were taken out and volatile trade frustrated the masses. The once titans in the group have lost that status, with REGN down more than one-quarter of its value as it battles with the very round 500 number. AMGN was hit to the tune of 7% Wednesday, after failing to follow through much after the break above a cup with handle pivot of 256.70 on 4/20. SGEN and NBIX are now in the 30% neighborhood off their most recent 52-week highs. Is the sentiment in the group washed out enough to start looking at some of the names that were the firmest during the groups darkest moments in the February-March drawdown? I think so.

27Apr 2021

Technology Sector Review: 4/28/21

Tuesday|0 Comments

Nasdaq Puzzlement? Often we will mention that the best breakouts tend to work right away. That goes not only for individual stocks but any tradeable instruments. Here we look at the Nasdaq, and it broke above a cup with handle just above the very round 14000 number. This is now the third time it has broken through the lofty level since 2/9. The tech-rich benchmark must be given the benefit of the doubt as it rests just 1% from its all-time highs here. Bulls want to see some distance put between itself and the breakout pivot, not fall apart abruptly. Tuesday the Nasdaq registered a bearish dark cloud cover, and although the majority of breakouts will be retested for their validity, so soon afterward is a bit of a red flag. A big say will be had by its largest components with both AAPL and MSFT bull flagging here, and AMZN which continues to feel uncomfortable CLOSING above the round 3400 number. Of course, each of these names REPORTS earnings this week, with this afternoon MSFT releasing numbers. The markets do their best to confound the most and be rest assured they will do so this week as well.

26Apr 2021

Industrial Sector Review: 4/27/21

Monday|0 Comments

"In The Sweet Spot?": "Honey"well is a big industrial conglomerate and the supertanker has risen more than 60% over the last one-year period and carries a dividend yield of 1.7%. It REPORTED earnings last week on 4/23 and fell 2.1%. In fact 3 of the last 4 times it released numbers it has declined to the tune of 3.7 and 2.8% on 1/29 and 7/24/20. Is the stock in the sweet spot for a purchase? One would be hard-pressed to declare it is acting soft with it just 4% off most recent all-time highs. What I did notice are the last 2 times it fell after numbers the damage was mostly done and the stock resumed its uptrend not long after. I think that could be the case here again, to purchase into a gap fill from the 4/8 session. For longer-term investors, they can have the comfort of knowing that the rising 50 day SMA lies just a few percent away and that the stock is acting well POST breakout from a cup base pivot of 216.80 taken out on 3/26.

23Apr 2021

Materials Sector Review: 4/26/21

Friday|0 Comments

Golden Touch: Commodities are saying inflation is on the way. The truth is, it has been here for some time. Lumber prices have been red hot, up more than 100% in 2021 (would never know that from the PRICE action in LL, now 31% from most recent 52 week highs). Palladium prices are strong. Steel is higher by more than 160% over the last one year period. Copper via the JJC is nearing a cup base pivot of 65.92, and a break above that trigger would negate a bearish dark cloud cover from the 2/25 session. Below is the chart of FCX, and it continues to make strides upward, now just 7% off its recent peak. The stock has some exposure to the gold arena, which seems to be waking up also. Against chief rival SCCO, it is acting much better with that name double from its annual peak, down 14% from its ascent made the week ending 2/26, which CLOSED 12 handles off its intraweek highs.