Sunday, December 15, 2013

Is the Fat Lady Getting Ready to Sing? - 12/15/13



Last week's market summary stated "At first glance Friday's market performance suggests further short term upside, but after a closer look the weak volume, rotation to large cap issues, and somewhat defensive performance of the industry groups makes a period of consolidation seem like a more likely outcome."

And indeed the markets pulled back last week, as shown in the table below (sorted by 5 week gain):

Index
1 Week Gain
2 Week Gain
3 Week Gain
5 Week Gain
13 Week Gain
26 Week Gain
Nasdaq Composite
-1.5%
-1.5%
0.2%
2.1%
7.5%
16.9%
Russell 2000
-2.2%
-3.1%
-1.6%
0.6%
5.0%
12.8%
S&P 500
-1.6%
-1.7%
-1.6%
0.3%
5.2%
9.1%
DJIA
-1.7%
-2.1%
-1.9%
0.0%
2.5%
4.5%

However, weekly volume was only average suggesting there was no institutional rush for the exits.

This table sorts market performance by dividend payment, non yielding stocks continued to outperform last week despite the pullback :


Price Performance
Dividend
Week   Ending 12/13
Month Ending 12/13
3 Months Ending 12/13
No
-1.15
1.20
7.46
Yes
-1.53
-0.56
5.14
Grand Total
-1.35
0.27
6.21

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. Despite the market retreat last week, defensive group performed poorly, suggesting investor's were positioning themselves for another leg higher in the market.

 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
13
8
4
7
6
# in the bottom 50 groups (out of 197)
3
6
11
12
11
9

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
6
4
6
5
11
# in the bottom 50 groups (out of 197)
13
7
6
5
11
6

30 Defensively Oriented Groups:
1 wk
2 wk
3 wk
5 wk
13 wk
26 wk
# in the top 50 groups (out of 197)
2
5
7
6
7
3
# in the bottom 50 groups (out of 197)
14
9
11
13
6
12

Summary: The Nasdaq continues to lead the major indexes across all trailing time periods, not the Dow or S&P 500. There was no flight to income as non yielding stocks lead price performance over all time periods for the past 3 months including last week; and last week defensively oriented industry groups performed poorly. Although the market pulled back last week these data points suggest this is but a temporary pause before the market resumes moving higher, most likely after the Fed meets this coming Tuesday and Wednesday.

So is the fat lady getting ready to sing? Not yet. In fact, it looks like she's still doing her Christmas shopping.

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Industry Group Performance:

Apparel: The Apparel-Clothing Mfg group ranks #19 on the trailing 5 week price performance list with a 5.3% gain, and the Apparel-Shoes & Rel Mfg group ranks #22 with a 5.2% gain. The groups have jumped +52 and +71 in MarketSmith's industry group rankings over the same 5 week period to currently rank #43 and #19 respectively.

Stocks of interest from these groups include Vince Holding (VNCE), The Jones Group (JNY, showing heavy accumulation while in a descending channel), Skechers (SKX), Hanesbrands (HBI, 1.4% from 50 day MA) and Under Armour (UA).

Energy: The Energy-Alternative/Other group has a MarketSmith industry group rank of 65 but ranks #2 on the trailing 5 week price performance list with a 10.7% gain. The Oil&Gas-Refining/Mktg is showing a similar divergence with a MarketSmith industry group rank of 146 but ranking #9 over the trailing 5 weeks with a 6.2% gain.

Stocks of interest include NRG Yield (NYLD), Valero Energy (VLO), Marathon Petroleum (MPC), Tesoro (TSO), PBF Energy (PBF, strong accumulation since Oct. 10), Alon USA Energy (ALJ, resting on the 200 day with heavy accumulation).

Retail: Select retail groups are also showing an interesting divergence between low MarketSmith industry group ranks and strong short term price performance. The table below lists these groups and is sorted high to low by trailing 5 week price performance.



Price Performance

MarketSmith
Industry Group
Symb.
5 Week Gain
5 Week Rank

Group Rank
5 week Rank Δ
Retail-Department Stores
G8077
5.6%
15

158
+31
Retail-Home Furnishings
G5710
5.5%
16

126
+28
Retail-Whlsle-Automobile
G5014
5.1%
24

129
+34
Retail-Whlsle-Auto Parts
G5013
5.0%
25

128
+29
Retail-Leisure Products
G5342
4.8%
29

117
+53
Wholesale-Food
G5040
4.3%
36

145
+11
Retail-Mail Order&Direct
G5321
3.6%
44

72
+44

Stocks of interest from these groups include Valuevision Media (VVTV), Tuesday Morning (TUES, great accumulation & huge sponsorship increases), L K Q Corp (LKQ, 1% shy of its pivot out of a second stage flat base), Penske Automotive (PAG), and Restoration Hardware (RH, it looks like the selling climaxed this past Friday).

                                            **********************

All data and charts displayed here are the property of MarketSmith, and are published here with their permission. 

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. 

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