Listed below
are notes from the author's weekly analysis.
The Sector
Trends blog does not make forecasts and does not cheerlead with its commentary.
The perspective offered is on current trends in the market, which sectors and
groups are rotating, and which stocks from these groups are likely to perform
best in a neutral/positive environment. Readers need to provide their own
assessment of market health, employ their own risk management strategies, and
trade accordingly. In a declining market nearly all equities will suffer,
including those found listed here.
All data and
charts displayed here are the property of MarketSmith, and are published here
with their permission.
Market Overview:
The table
below shows price performance for key markets and sectors over the trailing 26
weeks, and is sorted high to low by 5 week performance. The green and
red shading denotes relative performance +/- to the SP 500 for the time period
in question.
Industry Group
|
1 Week Gain
|
2 Week Gain
|
3 Week Gain
|
5 Week Gain
|
13 Week Gain
|
26 Week Gain
|
Philadelphia Housing Index
|
2.0%
|
4.7%
|
7.5%
|
10.4%
|
9.1%
|
33.9%
|
KBW Large Cap Bank Index
|
4.4%
|
7.4%
|
8.0%
|
8.8%
|
10.9%
|
29.7%
|
Philadelphia Semiconductor Index
|
1.0%
|
4.4%
|
7.0%
|
8.5%
|
9.8%
|
32.2%
|
Dow Jones Transportation Index
|
2.7%
|
5.3%
|
7.1%
|
6.6%
|
10.1%
|
33.9%
|
Nasdaq Composite
|
1.8%
|
3.6%
|
6.7%
|
6.2%
|
9.6%
|
22.6%
|
Pboe Oil Service Index
|
1.7%
|
3.3%
|
7.3%
|
5.9%
|
4.9%
|
25.7%
|
Russell 2000
|
2.2%
|
4.4%
|
6.5%
|
5.7%
|
7.9%
|
28.3%
|
SP 500
|
2.1%
|
3.3%
|
5.4%
|
4.9%
|
9.7%
|
22.6%
|
Russell 1000 Energy Index
|
1.9%
|
2.6%
|
5.6%
|
4.4%
|
4.4%
|
17.4%
|
DJIA
|
1.6%
|
2.5%
|
4.4%
|
3.3%
|
9.8%
|
22.0%
|
Cboe Technology Index
|
-0.4%
|
0.3%
|
5.6%
|
2.1%
|
1.8%
|
7.4%
|
Philadelphia Utility Index
|
0.7%
|
-2.1%
|
-2.4%
|
-0.9%
|
9.6%
|
16.8%
|
Philadelphia Gold/Silver Index
|
-10.2%
|
-9.5%
|
-8.3%
|
-16.2%
|
-32.3%
|
-41.2%
|
Another
strong week for the market as the Russell 2000 gained 2.2%, the S&P 500 2.1%,
the Nasdaq 1.8%, and the DJIA 1.6%.
As noted below defensive groups continue to under perform, and the path of least resistance appears to be higher.
As noted below defensive groups continue to under perform, and the path of least resistance appears to be higher.
Group Themes:
The tables
below show commodity, technology and defensively related group's price
performance over the trailing 1, 2, 3, 5, 13 and 26 week periods.
30 Commodity
Oriented Groups:
|
1 wk
|
2 wk
|
3 wk
|
5 wk
|
13 wk
|
26 wk
|
# in the
top 50 groups (out of 197)
|
8
|
5
|
7
|
5
|
2
|
6
|
# in the
bottom 50 groups (out of 197)
|
12
|
9
|
5
|
6
|
14
|
12
|
28 Technology
Oriented Groups:
|
1 wk
|
2 wk
|
3 wk
|
5 wk
|
13 wk
|
26 wk
|
# in the
top 50 groups (out of 197)
|
8
|
5
|
11
|
6
|
3
|
5
|
# in the
bottom 50 groups (out of 197)
|
7
|
7
|
6
|
9
|
11
|
8
|
30 Defensively
Oriented Groups:
|
1 wk
|
2 wk
|
3 wk
|
5 wk
|
13 wk
|
26 wk
|
# in the
top 50 groups (out of 197)
|
5
|
5
|
4
|
5
|
10
|
6
|
# in the
bottom 50 groups (out of 197)
|
7
|
12
|
16
|
11
|
0
|
5
|
No signs of
weakness here as the performance of defensive groups remains muted.
Industry Group Performance:
Auto: Auto related groups have been
very strong with 4 of 5 auto related groups ranked in the top 20 of the
trailing 5 week price performance list. Many of the names in this sector are
outside their buy ranges, but some are still setting up.
TRW
Automotive Holdings (TRW) is 6% past a 59.76 pivot. TRW is showing heavy
accumulation with an accumulation/distribution rating of “A-“, a 50 day up/down
volume ratio of 1.7, 25 day ratio 3.1, and fund sponsorship increases of 670
> 691 > 713 over the last 3 quarters.
Titan
International (TWI) is another auto name seeing accumulation. TWI has an “A-“
accumulation/distribution rank, a 50 day up/down volume ratio of 1.3, and a 25
day ratio of 1.7. Fund sponsorship has increased 292 > 312 > 317 over the
last 3 quarters. TWI has a 27.12 pivot
out of a 13 week stage 1 cup shaped base.
Building: Housing groups have cooled
off slightly, but this is primarily due to the improved performance of other
groups. Housing as a sector remains healthy, and the uptrend of the
Philadelphia Housing Sector Index from its October 2011 low remains intact.
Numerous stocks within the sector have set up.
Vulcan
Materials (VMC) is 0.31 shy of a 55.37 pivot out of a double bottom base. VMC
is under heavy accumulation with an “A” accumulation/distribution rating and a
50 day up/down volume ratio of 1.5, 25 day ratio 1.6. Institutional sponsorship
has increased over the last 4 quarters 635 > 645 > 700 > 714.
Apogee
Enterprises (APOG) was a high flyer until it disappointed on its last earnings
release AMC April 10, missing 0.15 vs 0.17 expectation. The fell ~ 20% over the
next 3 trading days, but has risen steadily since. The stock has a weak “C-“
accumulation/distribution rating but other indicators point to steady
accumulation. APOG has a 50 day up/down volume ratio of 1.3, but the 25 day
ratio is even stronger at 2.9; and institutional sponsorship has increased 222
> 246 > 262 > 290 > 303 over the past year. APOG has a 30.26 pivot,
but it’s a third stage base making it a slightly riskier selection.
Hovnanian
Enterprises (HOV) is showing signs of accumulation and appears ready to break
its descending trend line as it moves higher. Accumulation/distribution rank is
“B”, and while the 50 day up/down volume ratio is 1.2, the 25 day ratio is even
stronger at 1.6 – this accumulation occurring even though the stock has been in
a gentle pull back for the past 5 and a half months. RS has help strong at 97,
and FY ’14 earnings are forecast +390%. HOV looks like a buy with a break of
the descending trend line.
KBR Inc.
(KBR) is a member of the Bldg-Heavy Construction group (G1621). KBR
gained 4% on Friday after breaking out of a 56 week cup & handle pattern.
KBR is showing some accumulation with a 50 day up/down volume ratio of 1.5, 25
day ratio 1.8. Analysts forecast FY’13 EPS +25%, FY “14 +17% with recent
revisions being higher.
Quanta
Services (PWR) is 1% past a 29.91 pivot out of a 15 week flat base. PWR is under
accumulation with a “B+” accumulation/distribution rating, 50 day up/down
volume ratio of 1.1, and a 25 day ratio of 1.3. Fund sponsorship is increasing
steadily, 837 > 888 > 914 > 930 over the last 4 quarters. Note the
steady sales and EPS increases displayed at the bottom of the chart.
Lennar (LEN)
is 0.08 shy of a 43.90 pivot, and is seeing accumulation. The Accumulation/distribution
rating is “B”, 50 day up/down volume ratio 1.0, 25 day ratio 1.7, institutional
sponsorship 733 > 816 > 868 > 895 over the last 4 quarters. FY ’13 EPS
forecast +58%, FY ’14 +40%.
M I Homes
(MHO) is another builder, and is right at its 27.09 pivot out of a double bottom
base. “B+” accumulation/distribution rating, 50 day up/down volume ratio of only
0.9 but the 25 day ratio is 1.5. Fund sponsorship is increasing steadily, 190
> 223 > 225 > 236 over the last 4 quarters.
Potential Turn Around Groups:
The groups
listed in the table below rank in the bottom 50 of the 13 week price
performance list, but finished in the top 50 of trailing 1 week price
performance list, and in some cases the 2, 3 and 5 week lists as well.
Industry Group
|
Symb.
|
Sector
|
1 Week Gain
|
1 Week Rank
|
2 Week Gain
|
2 Week Rank
|
3 Week Gain
|
3 Week Rank
|
5 Week Gain
|
5 Week Rank
|
13 Week Gain
|
13 Week Rank
|
Computer-Networking
|
G3574
|
Computer
|
4.7%
|
14
|
6.5%
|
28
|
7.7%
|
59
|
1.9%
|
166
|
-5.0%
|
190
|
Oil&Gas-Drilling
|
G1381
|
Energy
|
2.8%
|
50
|
4.6%
|
64
|
9.4%
|
25
|
5.2%
|
92
|
-3.5%
|
187
|
Auto/Truck-Tires & Misc
|
G3011
|
Auto
|
6.6%
|
6
|
8.3%
|
18
|
10.5%
|
18
|
11.0%
|
15
|
-2.0%
|
185
|
Bldg-Heavy Construction
|
G1621
|
Building
|
3.9%
|
26
|
5.6%
|
43
|
9.7%
|
22
|
4.9%
|
99
|
1.7%
|
161
|
Computer Sftwr-Medical
|
G3069
|
Software
|
3.3%
|
31
|
1.7%
|
158
|
-2.5%
|
195
|
-3.0%
|
194
|
2.1%
|
159
|
Electrical-Power/Equipmt
|
G3621
|
Machine
|
3.0%
|
42
|
4.0%
|
92
|
4.6%
|
129
|
3.0%
|
145
|
3.2%
|
151
|
Atwood
Oceanics (ATW) is a member of the Oil&Gas-Drilling group (G1381). ATW is showing signs of accumulation with a
50 day up/down volume ratio of 1.8 and a 25 day ratio of 2.2, institutional
sponsorship increased from 445 funds to 467 over the past quarter, and analysts
project FY ’13 EPS +23%, FY ’14 +19% with the most recent revisions being
increases. ROE 15%, PE 11. ATW has a 55.49 pivot out of a stage 1 13 week
consolidation.
The Computer-Networking group (G3574) has been a laggard losing 5%
over the trailing 13 weeks and sporting a MarketSmith industry group rank of
#188. That may be starting to change as Cisco Systems (CSCO) announced results
last Wednesday AMC that beat expectations, and its CEO made positive comments
about the global economy. For the week CSCO gained 14.9% in volume
approximately 2.3x above average.
Ezchip
Semiconductor (EZCH) is an Israeli developer of network processor chips that’s
also a member of the Computer-Networking
group. EZCH is showing signs of accumulation with an
accumulation/distribution ranking of “A-“, a 50 day up/down volume ratio 1.8,
and a 25 day ratio of 2.2. Analysts forecast FY ‘13EPS +22%, and FY ’14 +32%,
PE 30. EZCH is 34.6% off its 52 week high, but appears to have put in its
bottom. EZCH broke out of a volatility squeeze May 7, and looks ready to move
higher. Note that EZCH is a thin stock trading an average of only 300K shares
daily.
Follow Up:
The blog has
highlighted Michael Kors Holdings (KORS) on numerous occasions. KORS has gained
~ 14.5% over the trailing 4 weeks. Despite this solid gain KORS is showing
little in the way of accumulation with both the 50 and 25 day up/down volume
ratio reading 0.9, and a look at its chart shows significantly heavier volume
on the left side of the cup’s decline than it does on the right side’s ascent.
Relative strength has weakened to a reading of 64. Whether all of this reflects
investor skepticism of KORS business results, or just fear of yet another
secondary offer is of course unknown, but KORS looks weak here.
Carrizo Oil
& Gas (CRZO) has been highlighted here several times over the past 6
months. CRZO has approached a 27.30 pivot for the third time, and has based
just below it. The evident accumulation suggests CRZO will move higher in the
near future.
