Last week's market summary stated "Although
the market pulled back last week... this is but a temporary pause before the
market resumes moving higher, most likely after the Fed meets this coming
Tuesday and Wednesday."
Can you nail it any better than that?
Last week the markets surged higher after the Fed announced
it would begin scaling back their purchases in mild increments. For the week the
Russell 2000 gained 3.6%, DJIA 3.0%, the Nasdaq 2.6%, and the S&P 500 2.4%.
In addition to the Fed announcement market enthusiasm was spurred by more
positive economic data: industrial production for November jumped 1.1%, above
the consensus range of 0.2% - 1%, and on Friday annualized real GDP growth was
unexpectedly revised sharply higher from 3.6% to 4.1%.
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. Industry group performance indicated a strong
preference for technology last week, and continued weakness in defensively
oriented issues.
|
30 Commodity Oriented Groups:
|
1
wk
|
2
wk
|
3
wk
|
5
wk
|
13
wk
|
26
wk
|
|
# in the top 50 groups (out of
197)
|
6
|
6
|
9
|
7
|
7
|
6
|
|
# in the bottom 50 groups (out
of 197)
|
6
|
7
|
5
|
10
|
10
|
10
|
|
28 Technology Oriented Groups:
|
1
wk
|
2
wk
|
3
wk
|
5
wk
|
13
wk
|
26
wk
|
|
# in the top 50 groups (out of
197)
|
18
|
11
|
12
|
7
|
7
|
12
|
|
# in the bottom 50 groups (out
of 197)
|
2
|
2
|
3
|
4
|
10
|
5
|
|
30 Defensively Oriented Groups:
|
1
wk
|
2
wk
|
3
wk
|
5
wk
|
13
wk
|
26
wk
|
|
# in the top 50 groups (out of
197)
|
4
|
2
|
3
|
5
|
4
|
3
|
|
# in the bottom 50 groups (out
of 197)
|
12
|
19
|
13
|
13
|
6
|
14
|
The blog's calculations of sector performance validate the
preference for tech; the blog calculates the top performing sectors last week
were, in order: Software +5.2%, Computer +5.1%, Internet +4.7%, and Semis
+4.5%.
Summary: Last week's market surge indicates the path of least
resistance is higher. All good things
come to an end at some point; but this blog strives to make data driven - not
opinion driven - analyses and right now the data indicates this market is
moving higher.
**********************
Industry Group Performance:
Software:
As
noted above software related stocks had a monster week with 8 of 10 groups
ranked in the top 50 based on trailing 1 week price performance. This
performance is detailed in the table below, sorted by 1 week price performance:
|
|
Price Performance
|
|
MarketSmith
|
|
Industry Group
|
Symb.
|
1 Week Gain
|
1 Week Rank
|
|
Ind. Group Rank
|
1 week Rank Δ
|
|
Comp Sftwr-Spec Enterprs
|
G2761
|
6.5%
|
6
|
|
59
|
-2
|
|
Computer Sftwr-Edu/Media
|
G3357
|
6.3%
|
7
|
|
155
|
+11
|
|
Computer Sftwr-Enterprse
|
G3583
|
5.8%
|
10
|
|
33
|
-5
|
|
Computer Sftwr-Desktop
|
G3270
|
5.7%
|
12
|
|
127
|
-22
|
|
Computer Sftwr-Gaming
|
G3584
|
5.1%
|
19
|
|
147
|
+4
|
|
Computer Sftwr-Security
|
G3220
|
4.6%
|
25
|
|
108
|
-11
|
|
Computer Sftwr-Design
|
G3575
|
3.9%
|
37
|
|
78
|
+16
|
|
Computer Sftwr-Financial
|
G2821
|
3.8%
|
41
|
|
32
|
-3
|
|
Computer Sftwr-Database
|
G3582
|
3.4%
|
52
|
|
74
|
-5
|
|
Computer Sftwr-Medical
|
G3069
|
1.5%
|
152
|
|
44
|
-35
|
The Computer Sftwr-Medical looks to be rolling off the top of the MarketSmith rankings, but
selections from the other groups should perform well.
Asiainfo Linkage (ASIA) is a Chinese
software company out of the enterprise software group. ASIA has an
"A" sponsorship rating, and a solid A/D rating of "B". ASIA
is a Zack's #1 ranked stock, and looks ready move higher out of 40 week flat
base on its weekly chart, with the last 3 weeks representing a 3 weeks tight.
As with all Chinese stocks, buyer beware and do your due diligence. Weekly
chart:
Interactive Intelligence (ININ) has
seen solid increases in both sales and EPS over the past 3 quarters, as well as
a 195 > 215 > 229 > 262 increase in institutional sponsorship over the
past 4 quarters. ININ is seeing some positive volume spikes as it moves off the
bottom of a 6 week flat base.
Medidata Solutions (MDSO) has a
"B+" A/D rating, and an "A" sponsorship rating.
Institutional sponsorship has increased 210 > 239 > 257 > 310 over the
last 4 quarters, and EPS estimates were recently revised higher. RS 97, EPS 97.
MDSO has a 62.57 pivot out of a cup & handle base.
Computer: With the exception of the Apple
dominated Computer-Hardware/Perip group, computer related industry
groups also had a very strong week. This performance is detailed in the
table below, sorted by 1 week price performance:
|
|
|
Price Performance
|
|
MarketSmith
|
|
Industry Group
|
Symb.
|
# stks
|
1 Week Gain
|
1 Week Rank
|
|
Ind. Group Rank
|
1 Week Rank Δ
|
|
Computer-Data Storage
|
G3578
|
18
|
12.8%
|
1
|
|
156
|
+15
|
|
Computer-Integrated Syst
|
G1004
|
14
|
4.3%
|
30
|
|
110
|
+17
|
|
Computer-Networking
|
G3574
|
30
|
3.9%
|
39
|
|
151
|
-3
|
|
Computer-Hardware/Perip
|
G3580
|
18
|
0.8%
|
179
|
|
22
|
-5
|
Out of this group MRCY has an interesting chart, showing
strong accumulation with a 50 day up/down volume ratio 2.0, and 25 day ratio of
2.6, yet just 4% past its pivot out of a double bottom base.
ALLT also looks interesting. +9% last week and has an
"A" sponsorship grade. 23% off its 52 week high but has FY '14 EPS
forecast +330%.
Housing: The Philadelphia
Housing Index surged higher last week gaining 4.2% and breaking higher out of a
3 month ascending triangle:
Meritage Homes (MTH) looks ready to move higher with a break
of this descending trend line. Strong earnings, sales and future EPS estimates,
A/D "A", sponsorship rating "A".
American Woodmark (AMWD) also looks very attractive. A cut
& paste of what was written for MTH: Strong earnings, sales and future EPS
estimates, A/D "A", sponsorship rating "A".
Headwaters (HW) is another name from the sector showing very
strong accumulation while in a flat base, and just now moving out of a 3 weeks
tight pattern:
Eagle Materials (EXP) was highlighted in the May 26 blog
post at 75.24 and has been basing ever since. If you agree with the sector
analysis EXP looks interesting bumping along the bottom of this 5 week channel,
especially given those 3 volume spikes over the last 6 days:
TRI Pointe Homes (TPH) has monster quarterly sales and EPS,
and future EPS estimates to match.
Standard Pacific Corp. (SPF) is showing heavy accumulation
with a 50 day up/down volume ratio 1.6, but a 25 day ratio of 3.1 all while in
a tight BB squeeze. Check out the strong quarterly sales and EPS results on the
chart below.
**********************
Note:
The blog will probably take next
weekend off, hence the next publish date would be Sunday, January 5, 2014.
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.
