Sunday, May 12, 2013

Sector & Group Rotation Notes – 5/12/13


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.

Index
1 Week Gain
2 Week Gain
3 Week Gain
5  Week Gain
13 Week Gain
26 Week Gain
Philadelphia Semiconductor Index
3.3%
5.9%
11.7%
11.2%
9.7%
26.0%
Philadelphia Housing Index
2.7%
5.4%
13.8%
10.7%
9.8%
25.8%
Pboe Oil Service Index
1.5%
5.5%
9.9%
9.0%
4.5%
24.0%
Nasdaq Composite
1.7%
4.8%
7.2%
7.3%
7.6%
18.3%
KBW Large Cap Bank Index
2.8%
3.4%
6.7%
6.1%
6.4%
21.6%
Russell 2000
2.2%
4.3%
6.9%
5.6%
6.7%
22.7%
Dow Jones Transportation Index
2.5%
4.2%
5.7%
5.6%
7.9%
27.0%
SP 500
1.2%
3.3%
5.0%
5.2%
7.6%
18.4%
DJIA
1.0%
2.8%
3.9%
3.8%
8.0%
18.0%
Cboe Technology Index
0.6%
5.9%
9.1%
3.5%
1.3%
5.7%
Russell 1000 Energy Index
0.7%
3.6%
6.9%
3.4%
1.8%
13.7%
Philadelphia Utility Index
-2.8%
-3.1%
-2.5%
0.3%
8.6%
14.5%
Philadelphia Gold/Silver Index
0.8%
2.1%
5.5%
-14.0%
-28.8%
-40.1%


Last week the market logged solid gains led by the Russell 2000's +2.2% and the Nasdaq's +1.7%.

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
11
12
4
3
5
# in the bottom 50 groups (out of 197)
4
2
4
7
17
11

28 Technology Oriented Groups:
1 wk
2 wk
3 wk
5 wk
13 wk
26 wk
# in the top 50 groups (out of 197)
5
11
12
8
3
4
# in the bottom 50 groups (out of 197)
6
5
3
8
11
10

30 Defensively Oriented Groups:
1 wk
2 wk
3 wk
5 wk
13 wk
26 wk
# in the top 50 groups (out of 197)
7
5
3
4
10
5
# in the bottom 50 groups (out of 197)
16
17
15
10
0
5

Last week defensive groups performed poorly investors demonstrated a slight preference for commodity oriented groups. This suggests continued positive performance from the markets.

Industry Group Performance:

Internet: For the past 2 weeks the blog has pointed out the positive reactions to earnings releases companies from the Internet-Content group (G3334).

Last week's blog highlighted WebMD (WBMD) as a high probability choice going into earnings. After Tuesday's AMC earnings release, on Wednesday WBMD showed a solid 20% gain before closing up 9.5%. WBMD saw additional buying Thursday & Friday, finishing the week +16.8%.


Two weeks ago the blog highlighted Bankrate (RATE) which gained 16.7%. RATE looks like it could push for $20 if it clears 16.30 with volume.


Building: The Bldg-Mobile/Mfg & Rv industry group (G3791) ranks #180 in MarketSmith's industry group rankings but is demonstrating strong short term price performance. The group ranks in the top 50 of the trailing 1, 2, 3 & 5 week price performance lists, coming in at #34 on the 5 week list with a 9.4% gain. The group has a 50 day up/down volume ratio of 1.4, ranking #33 in this metric out of 197 groups.

Winnebago Industries (WGO) is one for the watch list. WGO is currently working on the right side of a cup shaped base, but shows significant distribution on the left side. This distribution appears to be the result of their filing to sell $35M in stock on April 4. Despite the distribution institutional sponsorship shows steady increases over the last 4 quarters, 204 > 208 > 221 > 248. Recent EPS estimates reflect positive revisions, with FY '13 EPS forecast +261%, FY '14 +21%. 


Mining: The Mining-Metal Ores group (G1099) has an abysmal MarketSmith ranking of #196 out of #197, and when measured by price performance over the trailing 26 weeks also ranks #196 with a -9.9% loss. However, the group has been on a tear over the last 3 weeks with a 1 week gain of 3.9% (#29), a 2 week gain of 7.7% (#18), and a 3 week gain of 13.3% (#11). The group is comprised of 49 stocks, and last week 11 of them (22%) gained 10% or more in price, and 18 of them (36.7%) gained 5% plus.

Symbol
Name
Current Price
Days Vol Short Current
RS
EPS
A/D
50-Day Avg Vol (1000s)
Market Cap (mil)
% Off High
% Chg Cur Week
URZ
Uranerz Energy Corp
1.32
21.4
14
45
C
361
101.9
-30.16
32.4
TAS
Tasman Metals Ltd
0.88
0.1
3
23
B-
65
53.5
-56.86
27.5
MCP
Molycorp Inc
7.34
6.8
6
20
B+
7423
1384.2
-71.88
26.8
QRM
Quest Rare Minerals Ltd
0.69
2.8
2
15
B
125
42.9
-66.34
26.7
REE
Rare Element Resources
2.33
4.3
3
28
B+
274
104.7
-56.45
26.6
TC
Thompson Creek Metals Co
3.76
14.7
52
25
B
1784
638.7
-17.36
23.7
CLF
Cliffs Natural Resources
23.53
2.9
2
26
B
13547
3602.3
-59.68
18.2
URRE
Uranium Resources Inc
2.50
11.5
2
17
C+
138
49.4
-70.59
13.6
AWC
Alumina Limited Adr
4.35
2.9
54
20
B-
303
2653.7
-17.3
12.7
URG
Ur-Energy Inc
0.93
7.3
34
16
B-
211
112.1
-24.79
11.5
SVBL
Silver Bull Resources
0.44
6.0
29
43
B
216
69.7
-20.36
10.9
UEC
Uranium Energy Corp
1.67
27.5
4
18
D
532
142.8
-44.7
8.4
AVL
Avalon Rare Metals Inc
1.16
15.1
7
42
B
301
120.2
-53.04
7.4
TRQ
Turquoise Hill Resources
7.68
12.4
14
22
B
2291
7722.5
-30.87
7.3
TCK
Teck Resources Ltd
29.13
3.3
13
17
C-
3056
16898.3
-24.47
6.2
ZINC
Horsehead Hldg Corp
11.38
14.2
69
47
B+
314
501
-0.61
6.1
CCJ
Cameco Corp
20.90
1.3
34
22
C+
1581
8263.8
-10.03
5.5
GMO
General Moly Inc
1.94
15.7
2
30
D
331
177.6
-54.35
5.4

Investing in this group should probably be reserved for those comfortable with high risk speculation, but with that said the table above likely contains numerous short squeeze opportunities.

Retail: This blog commented on the improving strength seen in the retail sector in the April 7, 14 and 28 postings. That strength continued last week as 9 retail related groups finished in the top 50 of the trailing 1 week price performance list, against only two in the bottom 50. Six weeks ago only 1 retail group ranked in the top 50 of MarketSmith's industry group rankings, now there are 6.

The Retail-Whlsle-Jewelry group (G5971) gained 6.1% last week (#10), and jumped +64 in MarketSmith's industry group rankings to #119 overall.

Fossil (FOSL) gained 11.2% last week after crushing earnings, announcing EPS that beat 1.21 vs 0.97, and revenues $680.9M vs. $651M. FOSL is seeing strong accumulation with an "A-" accumulation/distribution ranking, 50 day up/down volume ratio of 1.3, 25 day ratio 2.5, and a solid increase in institutional support last quarter from 692 to 722 funds. ROE 28%, EPS 94, RS 77. FOSL looks like a buy as it crosses 108.80.


Francesca's (FRAN) is out of the Retail-Apparel/Shoes/Acc group and is also seeing accumulation with a "B" accumulation/distribution ranking, 50 day up/down volume ratio of 1.6, and a 25 day ratio 2.8. FRAN looks like a buy on a move above 29.90.


Apparel: 5 weeks ago the Sector Trends blog noted “The Apparel-Clothing Mfg group (G2300) has been an underperformer with an industry group rank of #162 and a relative strength of 19. However, the group actually gained 0.2% both Wednesday and Friday of last week as the market was picking up distribution days, Wednesday's gain occurred in volume 25% above average. This display of relative strength during the midst of very poor market performance suggests the group could begin to see improved performance.”

That analysis proved prescient as over the intervening 5 weeks the group has gained 9.8% to rank #30 on the trailing 5 week price performance list, and has jumped +51 in MarketSmith's industry group rankings to #111 overall.

Quicksilver (ZQK) was featured 2 weeks ago with a 6.83 pivot and broke out last week gaining 9.7% in volume 46% above average.


Under Armour (UA) is only 2% past its 58.52 pivot:


The Jones Group (JNY) is seeing accumulation with a 50 day up/down volume ratio of 1.6, and a 25 day ratio of 2.0. JNY looks ready to move higher.


Follow up:

The blog has featured Workday (WDAY) numerous times in both its weekly analysis and tweets. WDAY is seeing very heavy accumulation with a 50 day up/down volume ratio of 2.9, and a 25 day ratio of 4.6.


Carrizo Oil & Gas was featured a few months ago with a 22.69 buy point. It's now pushing up against a 27.30 buy point for the third time and is seeing heavy accumulation. 



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