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
|
Pboe Oil Service Index
|
-0.8%
|
1.5%
|
3.5%
|
6.9%
|
18.7%
|
8.6%
|
Philadelphia Semiconductor Index
|
1.0%
|
2.3%
|
3.5%
|
6.8%
|
14.9%
|
4.6%
|
Dow Jones Transportation Index
|
0.9%
|
0.7%
|
3.8%
|
6.8%
|
17.8%
|
16.7%
|
Russell 1000 Energy Index
|
0.2%
|
1.2%
|
3.1%
|
5.4%
|
11.7%
|
7.3%
|
DJIA
|
-0.1%
|
0.7%
|
2.5%
|
4.2%
|
9.2%
|
5.9%
|
Philadelphia Housing Index
|
-1.2%
|
-2.8%
|
-0.3%
|
4.0%
|
14.5%
|
34.6%
|
Russell 2000
|
0.3%
|
0.9%
|
2.3%
|
3.9%
|
14.9%
|
14.0%
|
SP 500
|
0.3%
|
1.0%
|
2.2%
|
3.5%
|
10.0%
|
8.0%
|
Nasdaq Composite
|
0.5%
|
1.4%
|
1.9%
|
3.0%
|
9.9%
|
5.7%
|
KBW Large Cap Bank Index
|
0.5%
|
1.6%
|
2.8%
|
2.4%
|
14.3%
|
18.0%
|
Philadelphia Utility Index
|
-0.1%
|
0.8%
|
2.5%
|
2.0%
|
5.4%
|
-3.7%
|
Cboe Technology Index
|
2.1%
|
3.1%
|
0.3%
|
0.8%
|
4.3%
|
-3.0%
|
Philadelphia Gold/Silver Index
|
0.3%
|
1.1%
|
-5.5%
|
-6.2%
|
-15.8%
|
-3.8%
|
Last week the market
made it six straight weeks of gains for the Nasdaq, Russell 2000, and S&P 500;
the Dow broke its 5 week stretch with a 0.1% loss. The Nasdaq led the broad
based indices with a 0.5% gain.
Economic data
was modestly positive. On Monday factory orders showed growth but missed
consensus slightly coming in at 1.8% vs. consensus 2.4%, but a positive was an
unusually strong 0.8% growth in unfilled orders. Tuesday's ISM non-manufacturing index edged by
consensus 55.2 vs. 55.1(values above 50 indicate expansion), suggesting a stronger economy adding to job growth.
Thursday's jobless claims data missed consensus by 6K but the month to month average shows slow
improvement.
Earnings continue
to power individual stocks higher. Shutterfly (SFLY) was highlighted here
several weeks ago, and again last week this blog pointed out its volatility
squeeze; SFLY gained 25.8% for the week after releasing earnings results.
LinkedIn (LNKD) was highlighted in the January 13th and 27th blog posts and
gained 21.5% for the week after announcing earnings Thursday AMC. Hornbeck Offshore Services
(HOS) was featured last Sunday and gained 13.7% for the week after Wednesday's earnings announcement.
Next week sees releases from 500 companies, including 241 with market caps $1B+. KORS, ASGN, RKUS, IPGP, OII, CLMT, PXD, EOG, TRIP, TRLA, RAX, PCYC, ALXN, REGN, FOSL, PDFS and ELLI all report among many others.
Next week sees releases from 500 companies, including 241 with market caps $1B+. KORS, ASGN, RKUS, IPGP, OII, CLMT, PXD, EOG, TRIP, TRLA, RAX, PCYC, ALXN, REGN, FOSL, PDFS and ELLI all report among many others.
Defensively
oriented groups continue to perform modestly and the advance/decline line is
hitting new highs; both data points suggest the market could head 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.
33 Commodity Oriented
Groups:
|
1 wk
|
2 wk
|
3 wk
|
5 wk
|
13 wk
|
26 wk
|
# in the
top 50 groups (out of 197)
|
8
|
8
|
7
|
7
|
11
|
7
|
# in the
bottom 50 groups (out of 197)
|
12
|
7
|
9
|
10
|
6
|
8
|
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
|
7
|
7
|
7
|
6
|
0
|
# in the
bottom 50 groups (out of 197)
|
9
|
12
|
11
|
10
|
4
|
13
|
30 Defensively
Oriented Groups:
|
1 wk
|
2 wk
|
3 wk
|
5 wk
|
13 wk
|
26 wk
|
# in the
top 50 groups (out of 197)
|
8
|
6
|
5
|
8
|
2
|
7
|
# in the
bottom 50 groups (out of 197)
|
4
|
3
|
5
|
5
|
11
|
9
|
For the
second consecutive week there are no clear patterns of rotation between the three
different industry group themes. Performance of the defensively oriented groups
is tame.
Industry Group Performance:
Energy: For the past two weeks the
Sector Trends blog has pointed out the strength in the Oil&Gas-Drilling group (G1381), Oil&Gas-Field
Services group (G1380), and Oil&Gas-Refining/Mktg group (G2900)
groups.
Last week this continued as the Oil&Gas-Field
Services group (G1380) was the fourth best performing group on the week
gaining 4.9%, and jumping +27 from #111 to #84 in MarketSmith's industry group
rankings. The Oil&Gas-Refining/Mktg
group (G2900) came in at #12 in weekly price performance gaining 3.3%. Six
separate groups from the energy sector rank in the top 50 of the trailing 1,2
and 5 week price performance lists.
On Friday Calumet (CLMT) broke through
its 33.96 pivot out of a 17 week consolidation gaining 4.9% for the day on
nearly 2x average volume. CLMT is part of the red hot Oil&Gas-Refining/Mktg
group, and its move higher was perhaps spurred by news of a new refinery in
North Dakota. However, CLMT has been under accumulation and its more likely investors
are looking forward to next Wednesday morning's earnings announcement. CLMT is
now 3% past its pivot.
Ultrapar (UGP) is under
accumulation with an "A+" accumulation/distribution rating and a 50
day up/down volume ratio of 1.8. UGP is 2% past its pivot out of a 36 week
consolidation.
On Friday Northern Tier Energy (NTI) broke out of a first stage 6 week flat base gaining 7.4% on 2x average volume. NTI is now outside the 5% buy zone, but has had quite a run over the past 3 weeks and could pull back. As seen on the chart NTI is experiencing heavy accumulation, and has been on a tear since completing a recent primary offering January 18th.
Leisure: Leisure related groups
prospered last week as more investors factored in the impact of an improving
economy; 5 of 6 leisure groups finished in the top 50 of the 1 week price
performance list, and 4 of 6 are in the top 50 of the trailing 3 week list.
Carnival
(CCL) is under heavy accumulation with a 50 day up/down volume ratio of 1.6,
but a 25 day ratio of 2.3! FY '13 EPS are forecast +29%, and FY '14 +22%. CCL
has less debt than its peers, and controls nearly 50% of the cruise market.
About 38% of its business comes from Europe, and this segment of its business
should grow as the Europe's economy recovers. CCL has a 39.62 pivot out of a
cup & handle base.
Las Vegas
Sands (LVS) is also under heavy accumulation with "A-" accumulation/distribution rating and a 50 day
up/down volume ratio of 1.6 and a 25 day ratio of 2.1. LVS is 1% past its pivot
out of a cup & handle base.
MGM Resorts (MGM) is another
casino stock breaking out of a cup & handle.
Penn National (PENN) is 2% past
its pivot out of a double bottom base. 50 day up/down volume 1.5, 25 day ratio
2.3.
Imax (IMAX) has broke out of
this short 5 week consolidation on Friday gaining 3.7% on over 2x average
volume. IMAX closed at 25.04, just above its 24.96 pivot. Weekly chart:
Semiconductors: The Philadelphia
Semiconductor Index has been steadily pushing higher, and within MarketSmith's
semiconductor related groups the Elec-Semiconductor Mfg group (G3677)
has been a standout. The group ranks in the top 20 of the trailing 2, 3, 5 and
13 week price performance lists, and this past week jumped +34 from #81 to #47
in MarketSmith's industry group rankings.
On Friday
Diodes Inc. (DIOD) broke out of a 3 weeks tight pattern gaining 4.8% on almost
2x average volume. DIOD is under accumulation with a 50 day up/down volume
ratio of 2.0, 25 day 2.3; and has a "B+" accumulation/distribution
rating. FY '13 EPS are forecast +92%.
Metals: The Metal Proc &
Fabrication group (G3499) ranks 42 on the trailing 13 week price performance
list with a 17.7% gain, and over the trailing 3 weeks has jumped +35 in
MarketSmith's industry group rankings from #81 to #46.
Commercial
Metals (CMC) is seeing heavy accumulation with an "A" accumulation/distribution
rating and an up/down volume ratio of 2.0. Analysts forecast FY '13 EPS +52%
and FY '14 +36%. CMC is 3% past its pivot out of a yearlong consolidation.Weekly chart:
Internet: The Internet-Content
group (G3334) got a boost from LNKD's stellar performance last week and now ranks
in the top 25 of the trailing 1, 2, 3, 5 and 13 week price performance lists;
and last week jumped +37 in MarketSmith's industry group ranks from #109 to
#72.
Trip Advisor
(TRIP) is scheduled to announce earnings Wed. 2/13. TRIP is at its pivot out of
a cup & handle base, and is on the cusp of new highs. Accumulation is solid
with a "B" accumulation/distribution rating and 50 day up/down volume
ratio of 1.5. As the chart shows, TRIP's EPS announcements tend to be binary
events...
Follow up: The Sector Trends blog has highlighted Michael Kors numerous times over the past month. KORS is scheduled to release earnings Tuesday morning, 2/12/13. KORS gapped through a 58.62 buy point two weeks ago Monday, but was pushed back within the first 5 minutes of the day. After selling off for a few days KORS saw solid buying in above average volume last week. Strong earnings should send KORS back over its buy point.
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