Listed below are notes from the author's (vacation shortened)
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. Clicking once on a
chart enlarges it for enhanced readability.
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 Gold/Silver Index
|
1.7%
|
8.9%
|
14.9%
|
22.0%
|
24.9%
|
10.2%
|
|
Philadelphia Housing Index
|
1.7%
|
10.7%
|
14.4%
|
15.6%
|
34.2%
|
30.7%
|
|
KBW Large Cap Bank Index
|
-2.7%
|
1.9%
|
6.4%
|
6.3%
|
11.4%
|
1.4%
|
|
FXE euro
|
-1.0%
|
1.4%
|
3.3%
|
5.3%
|
3.3%
|
-2.3%
|
|
Russell 2000
|
-1.1%
|
2.1%
|
5.3%
|
4.3%
|
10.4%
|
3.1%
|
|
Russell 1000 Energy Index
|
-1.9%
|
2.2%
|
5.1%
|
3.4%
|
16.8%
|
2.7%
|
|
Nasdaq Composite
|
-0.1%
|
1.4%
|
3.7%
|
3.4%
|
9.9%
|
3.7%
|
|
SP 500
|
-0.4%
|
1.5%
|
3.8%
|
3.0%
|
9.4%
|
4.5%
|
|
IBD 85/85 Index
|
-0.4%
|
0.3%
|
2.9%
|
2.7%
|
5.3%
|
-0.1%
|
|
DJIA
|
-0.1%
|
2.2%
|
3.7%
|
2.3%
|
7.4%
|
3.8%
|
|
Pboe Oil Service Index
|
-2.8%
|
2.2%
|
4.5%
|
1.8%
|
21.5%
|
-3.0%
|
|
Philadelphia Semiconductor Index
|
-2.8%
|
-1.5%
|
-0.3%
|
-2.5%
|
4.4%
|
-9.3%
|
|
Philadelphia Utility Index
|
-0.2%
|
-0.6%
|
-0.1%
|
-2.5%
|
-1.5%
|
3.0%
|
|
Dow Jones Transportation Index
|
-5.9%
|
-2.7%
|
-1.9%
|
-5.5%
|
-3.4%
|
-5.9%
|
Although there were no distribution days last week the
market is beginning to flash some warning signs.
On Tuesday Fedex announced earnings results that beat analyst
estimates but lowered guidance for the 2nd quarter to $1.30-$1.45
from consensus $1.67, and FY ’13 guidance to $6.20-$6.60 from consensus $7.04.
Fedex stated exports around the globe had contracted and that their guidance
assumed weaker economic growth. Fedex declined 6.4% on the week in 2x average
volume.
Last week the markets posted minor declines in increasing
volume. While most of this volume was the result of the quadruple witching that
occurred Friday, after Fedex’ earnings announcement Tuesday morning the Nasdaq churned
Tue – Thu in volume about 9% above average for a -0.0008% loss.
Dow Jones Transportation Index fell
5.9% on the week, its largest weekly decline since last November. For the week
the Transportation-Rail industry group declined 6.8%, Transportation-Ship
-3.9%, Transport-Air Freight -3.9%, and Transportation-Truck
-3.6%. Volume increased in all of these groups and was doing so prior to Friday’s
expiration. With the exception of the airlines the remaining 6 transportation
related industry groups finished in the bottom 35 on the weekly price
performance list.
Since resuming publication 8/5/12 the
Sector Trends blog has noted the rotation of funds out of defensively oriented
industry groups. That changed this past week as 16 groups finished in
the top 50 of the weekly price performance list, with only 3 in the bottom 50. The
top performing group for the week was Tobacco which gained 3.6% in
volume 24% above average. Last week all 7 food related groups finished in the
bottom 40, this week 6 of 7 finished in the top 63. Two Utility groups finished
in the top 50 and all 4 utility related groups finished in the top 70.
According to Investors Intelligence the
percentage of bullish investment advisors has increased to 54.2% while the
percentage of bearish advisors has declined to 24.2%. Investors Intelligence considers
the norm to be 45% bulls, 35% bears and 20% neutral, and has found that a
majority of advisors and commentators are almost always wrong at market turning
points. The current 54.2% bullish reading is considered high.
Since the June 4th intraday low the SP 500 has
gained over 15%, and during this time the largest weekly decline was 0.6%. The
fact the markets have had a very solid run, combined with the red flags listed
above, suggests now is a time for increased caution.
Larger 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.
|
33 Commodity Oriented Groups:
|
1 wk
|
2 wk
|
3 wk
|
5 wk
|
13 wk
|
26 wk
|
|
# in the
top 50 groups (out of 197)
|
0
|
10
|
11
|
2
|
13
|
2
|
|
# in the
bottom 50 groups (out of 197)
|
12
|
4
|
5
|
7
|
5
|
14
|
|
28 Technology Oriented Groups:
|
1 wk
|
2 wk
|
3 wk
|
5 wk
|
13 wk
|
26 wk
|
|
# in the
top 50 groups (out of 197)
|
7
|
8
|
9
|
11
|
7
|
3
|
|
# in the
bottom 50 groups (out of 197)
|
7
|
10
|
8
|
10
|
9
|
9
|
|
30 Defensively Oriented Groups:
|
1 wk
|
2 wk
|
3 wk
|
5 wk
|
13 wk
|
26 wk
|
|
# in the
top 50 groups (out of 197)
|
16
|
2
|
2
|
8
|
4
|
15
|
|
# in the
bottom 50 groups (out of 197)
|
3
|
9
|
12
|
12
|
12
|
4
|
Commodity oriented groups performed comparatively poorly
last week, and the move in these groups could be beginning to wane. Energy
issues in particular performed poorly; 10 of 13 energy related groups finished
in the bottom half of the weekly price performance list including 6 groups in
the bottom 50.
Tech groups continue to meander although the Internet-Content
and Internet-Network Solutions groups continue to show strength. The Internet-Content group is ranked
#18 in MarketSmith’s industry group rankings, and gained 3.1% last week
finishing #2 on the weekly price performance list. The Internet-Network Solutions
group is ranked #41 in MarketSmith’s
rankings, and gained 1.8% on the week finishing #12 on the weekly price
performance list. Semiconductor related groups fell last week; all three semi
related groups rank in the bottom 50 of the 1, 2, 3, and 5 week price
performance lists.
As discussed above defensively oriented groups reversed
course last week and outperformed. This type of action among the defensive
groups sometimes forecasts a market pullback.
Group Performance:
Gold: For
the last 4 weeks the Sector Trends blog has highlighted the move in gold and
the Mining-Gold/Silver/Gems industry group. Over this period of time the
group has gained 16.7% and jumped from #155 to #2 in MarketSmith’s industry
group rankings. Stocks highlighted here include AUY +15.1%, SSRI +12.8%, and
KGC +9.9%. The move continued last week as the Mining-Gold/Silver/Gems group
gained 2.2% to finish #10 on the weekly price performance list.
Healthcare:
A strong move by healthcare related industry groups last week as 10 of the 14
related groups finished in the top 40 on the weekly price performance group;
this compares to the week ending 9/15 when 9 of the 14 groups finished in the
bottom 50. 8 of the groups jumped 13 or more spots in MarketSmith’s industry
group rankings.
MWI Veterinary Supply (MWIV) is working on a handle to go
with its cup pattern. 2 consecutive quarters of +25% earnings and sales growth.
RS 89, EPS 97, ROE 16%, EPS forecast +24% FY ’12, and +12% FY ’13. Very thin
stock however, average daily volume only 76K. MWIV has a 109.58 pivot.
Follow up/Review:
The table below follows up on stocks highlighted by the
Sector Trends blog since resuming publication 8/5/12. Note that buy points can
and do change over time, check the Sector Trends Twitter feed for updates.
|
Open
|
||||||||
|
Symbol
|
Date Published
|
Price at Publish
|
Current Price
|
Buy Point
|
BP hit?
|
Current Stop
|
Gain %
|
Comment:
|
|
FTK
|
8/5/12
|
9.96
|
12.73
|
9.96
|
Y
|
11.35
|
27.8%
|
Looks
fine.
|
|
AUY
|
8/26/12
|
16.81
|
19.34
|
16.81
|
Y
|
18.25
|
15.1%
|
Closed
at the bottom of its daily range Fri, could see resistance here, see monthly
chart
|
|
SSRI
|
8/26/12
|
14.86
|
16.76
|
14.86
|
Y
|
15.55
|
12.8%
|
+4.2% last week in volume 56% above avg.
|
|
MAS
|
9/9/12
|
14.15
|
16.25
|
14.50
|
Y
|
14.50
|
12.1%
|
Up 2.8%
on the week in 25% higher than average volume.
|
|
BCOR
|
8/5/12
|
15.33
|
17.94
|
16.02
|
Y
|
16.30
|
12.0%
|
Surged
10.1% on Thursday in 1.5x average volume.
|
|
SCSS
|
8/19/12
|
29.81
|
33.36
|
29.81
|
Y
|
29.95
|
11.9%
|
Looks
OK.
|
|
OSK
|
8/19/12
|
25.22
|
28.42
|
25.62
|
Y
|
27.00
|
10.9%
|
Looks
OK.
|
|
KORS
|
8/19/12
|
52.09
|
57.35
|
52.09
|
Y
|
52.09
|
10.1%
|
Up 9.3%
on 3x average volume Fri after raising guidance, secondary planned but not
priced
|
|
KGC
|
9/9/12
|
9.66
|
10.33
|
9.40
|
Y
|
9.40
|
9.9%
|
Gold
miners seeing heavy accumulation.
|
|
SNPS
|
8/19/12
|
31.28
|
33.73
|
31.28
|
Y
|
33.73
|
7.8%
|
Closed
at its low for the day in heavy volume. Selling Monday at the open.
|
|
MHK
|
9/16/12
|
78.92
|
82.59
|
77.00
|
Y
|
77
|
7.3%
|
Got a
fill on the pullback to 77 on Tuesday.
|
|
FEIC
|
8/5/12
|
52.48
|
56.23
|
51.60
|
Y
|
50.75
|
7.1%
|
Up 3% on
2x avg volume Friday. Tight volatility squeeze, & closed Fri just above
upper BB
|
|
ILMN
|
9/9/12
|
45.37
|
48.48
|
45.37
|
Y
|
44.00
|
6.9%
|
Looks
good, tight trading last week.
|
|
HAR
|
8/19/12
|
46.54
|
48.79
|
46.84
|
Y
|
46.75
|
4.2%
|
Slowly
moving higher.
|
|
PVH
|
8/26/12
|
87.94
|
92.63
|
89.31
|
Y
|
90.00
|
3.7%
|
Looks
OK.
|
|
VFC
|
8/19/12
|
153.03
|
158.49
|
153.03
|
Y
|
155.00
|
3.6%
|
Creating
a short descending channel after last week's spurt.
|
|
MENT
|
8/19/12
|
15.99
|
16.47
|
15.99
|
Y
|
16.25
|
3.0%
|
Will
probably get stopped out this week.
|
|
KBR
|
9/16/12
|
31.93
|
30.95
|
30.50
|
Y
|
29.5
|
1.5%
|
Pulled
back to the 30.50 buy point on Thursday, now has 32.10 pivot out of cup &
handle.
|
|
MYGN
|
9/9/12
|
26.83
|
27.38
|
27.10
|
Y
|
26.00
|
1.0%
|
Slow
trade last week, looks OK.
|
|
FTI
|
9/9/12
|
48.54
|
48.76
|
48.52
|
Y
|
47.00
|
0.5%
|
Looks
OK.
|
|
ESV
|
9/9/12
|
57.05
|
58.23
|
58.02
|
Y
|
54.69
|
0.4%
|
Looks
OK.
|
|
IACI
|
8/5/12
|
53.10
|
53.22
|
52.78
|
Y
|
49.92
|
0.2%
|
Volatility
squeeze break out failed on Fri as IACI fell back inside upper BB
|
|
OII
|
9/9/12
|
55.02
|
56.19
|
56.45
|
Y
|
53.50
|
-0.5%
|
Gapped
higher Friday but finished near the bottom of its daily range.
|
|
CRI
|
8/19/12
|
53.43
|
55.45
|
56.01
|
Y
|
53.50
|
-1.0%
|
2%
pullback last week, volume only 50% of average.
|
|
CMC
|
9/16/12
|
14.96
|
13.75
|
14.25
|
Y
|
13.75
|
-3.5%
|
Got the
pullback fill @ 14.25, but too much selling, Selling
Monday at the open.
|
|
Avg.
|
6.6%
|
|||||||
|
Watch List
|
||||||||
|
PIR
|
9/9/12
|
19.38
|
19.78
|
N
|
Waiting
for a handle which might not occur.
|
|||
|
KOG
|
9/23/12
|
9.70
|
9.70
|
9.92
|
N
|
Stopped
out Tue 9/18, but will rebuy 9.92 pivot out of cup & handle base.
|
||
|
|
|
|
|
|
|
|
|
Closed
|
|
Price Sold
|
||||||||
|
KOG
|
8/5/12
|
8.16
|
9.25
|
8.16
|
Y
|
13.4%
|
Stopped
out Tuesday 9/18/12
|
|
|
CHS
|
8/19/12
|
16.80
|
18.55
|
16.80
|
Y
|
10.4%
|
Stopped
out Tuesday 9/18/12
|
|
|
FIRE
|
8/19/12
|
51.11
|
54.00
|
51.11
|
Y
|
5.7%
|
Stopped
out Tuesday 9/18/12
|
|
|
SYMC
|
8/19/12
|
18.01
|
18.74
|
18.09
|
Y
|
3.6%
|
Stopped
out Thursday 9/20/12
|
|
|
IPGP
|
8/5/12
|
57.24
|
59.50
|
57.51
|
Y
|
3.5%
|
Stopped
out Thursday 9/20/12
|
|
|
CRZO
|
8/5/12
|
24.67
|
27
|
26.50
|
Y
|
1.9%
|
Stopped
out Wed 9/19/12
|
|
|
SCS
|
8/26/12
|
9.73
|
9.86
|
9.86
|
Y
|
0.0%
|
Stopped
out Tuesday 9/18/12
|
|
|
BECN
|
8/19/12
|
27.61
|
27.90
|
28.00
|
Y
|
-0.4%
|
Stopped
out Wed 9/19/12 during opening imbalance
|
|
|
RDC
|
9/9/12
|
36.14
|
35.5
|
36.50
|
Y
|
-2.7%
|
Volatility
squeeze failed, stopped out Thursday 9/20/12
|
|
|
WPRT
|
8/26/12
|
34.60
|
33.50
|
34.50
|
Y
|
-3.2%
|
Stock
never moved, loss reflects price at Friday 9/7 close.
|
|
|
RL
|
8/26/12
|
159.58
|
153.95
|
159.58
|
Y
|
-3.5%
|
Stopped
out on gap down after Burberry warning Tuesday 9/11/12
|
|
|
CMI
|
8/19/12
|
103.19
|
98.50
|
103.19
|
Y
|
-4.5%
|
Stopped
out at 98.50 per original note.
|
|
|
TEN
|
8/19/12
|
31.53
|
29.65
|
31.53
|
Y
|
-6.0%
|
Stopped
out Thursday 9/20/12
|
|
|
FRAN
|
8/19/12
|
34.32
|
31.93
|
33.93
|
Y
|
-7.0%
|
Hit -7%
stop 9/5/12, -2.9% if you sold at the open on earnings announcement.
|
|
|
Avg.
|
0.8%
|
|||||||
|
Dropped
|
||||||||
|
Z
|
8/5/12
|
38.63
|
44.00
|
N
|
Pattern
aged out.
|
|||
|
PRLB
|
8/5/12
|
37.89
|
39.08
|
N
|
Dud.
|
|||
|
WPRT
|
8/19/12
|
39.03
|
40.40
|
N
|
Dud.
|
|||
|
CTB
|
8/19/12
|
20.22
|
19.00
|
N
|
Never
pulled back to buy area, now up another 16%
|
|||
|
SKUL
|
8/19/12
|
16.66
|
17.76
|
N
|
Crushed
this week by Morgan Stanley downgrade
|
|||
|
IAG
|
9/9/12
|
14.06
|
13.50
|
N
|
Never
pulled back to buy area, now up 12% from date of publish
|
|||
|
LAD
|
9/9/12
|
31.06
|
30.50
|
N
|
Never
pulled back to buy area, now up 5% from date of publish
|
|||
|
PETM
|
9/9/12
|
71.44
|
72.50
|
N
|
Dropped
though its 50 day MA Friday 9/14 in volume 68% higher than average.
|
|||
|
TWI
|
9/9/12
|
21.17
|
22.25
|
N
|
Pattern
failed.
|
|||
|
CRS
|
9/16/12
|
55.70
|
57.44
|
N
|
Dropped
due to poor price performance of industry group.
|
|||
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