Listed
below are notes from the author's weekly analysis.
Notice: the Sector Trends blog will not publish next
weekend, but will return
Sunday, August 4.
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
|
|
KBW Large Cap Bank Index
|
2.4%
|
3.3%
|
7.6%
|
9.8%
|
20.4%
|
23.5%
|
|
Pboe Oil Service Index
|
1.9%
|
4.2%
|
7.6%
|
7.5%
|
15.2%
|
13.3%
|
|
Russell 2000
|
1.3%
|
4.5%
|
7.5%
|
7.0%
|
15.1%
|
17.7%
|
|
Philadelphia Utility Index
|
1.7%
|
6.3%
|
4.2%
|
5.8%
|
-3.8%
|
9.8%
|
|
Russell 1000 Energy Index
|
2.2%
|
4.7%
|
6.8%
|
5.3%
|
11.6%
|
9.6%
|
|
Nasdaq Composite
|
-0.3%
|
3.1%
|
5.4%
|
4.8%
|
11.9%
|
14.4%
|
|
Philadelphia Semiconductor Index
|
-0.7%
|
2.1%
|
3.8%
|
4.4%
|
16.6%
|
18.4%
|
|
Dow Jones Transportation Index
|
2.3%
|
4.7%
|
6.7%
|
4.4%
|
9.2%
|
15.6%
|
|
SP 500
|
0.7%
|
3.7%
|
5.3%
|
4.0%
|
8.8%
|
13.9%
|
|
DJIA
|
0.5%
|
2.7%
|
4.3%
|
3.1%
|
6.8%
|
13.9%
|
|
Cboe Technology Index
|
0.1%
|
2.5%
|
5.3%
|
1.8%
|
8.8%
|
1.4%
|
|
Philadelphia Housing Index
|
-0.5%
|
6.2%
|
4.1%
|
-2.0%
|
3.6%
|
-0.3%
|
|
Philadelphia Gold/Silver Index
|
5.9%
|
9.7%
|
5.2%
|
-7.5%
|
-7.8%
|
-41.2%
|
The S&P
500 edged higher last week with a 0.7% gain, while the Nasdaq fell -0.3%. The
Russell 2000 continued to lead the major broad based indexes with a 1.7% gain,
and over the trailing 5 weeks has gained 7%, a result 75% better than the S&P's
4% gain. The Nasdaq picked up 3 distribution days last week, and the S&P 1.
Earnings
results helped drive index performance both +/- last week. Bank stocks did
particularly well as BAC gained 7.04%
for the week, followed by MS +5.63%, and
C + 3%. The Nasdaq's Friday distribution day was largely a result of
Microsoft's huge miss and resulting -11.4% decline, helped along by Google's
earnings miss and subsequent 1.5% decline. Microsoft traded 5x average volume, Google 3x. GE was a
boost for the DJIA and S&P 500, gaining 4.6% on 2.5x average volume after
beating expectations by a penny on Friday. More importantly, GE reported a
record backlog of equipment and services suggesting improved future sales and
margins.
896
companies will report next week, including large caps Apple, AT&T, Visa,
Amazon, McDonalds, UPS, Boeing and Facebook. It will be another heavy week for
the Banking sector with 136 banks reporting, followed by the Medical sector
with 73 reports, Energy 51, Real Estate and Semiconductors 42 each, and Retail
with 40.
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)
|
9
|
8
|
11
|
8
|
4
|
5
|
|
#
in the bottom 50 groups (out of 197)
|
8
|
7
|
7
|
12
|
9
|
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)
|
3
|
5
|
7
|
10
|
10
|
4
|
|
#
in the bottom 50 groups (out of 197)
|
10
|
7
|
6
|
3
|
3
|
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)
|
10
|
10
|
2
|
3
|
5
|
7
|
|
#
in the bottom 50 groups (out of 197)
|
5
|
4
|
9
|
9
|
15
|
2
|
The performance of commodity oriented groups has improved, driven
almost exclusively by the performance of energy related groups.
Industry Group Performance:
Banks: Four weeks ago the June 23 blog post highlighted the
improving performance of regional banks. The table below shows the banking
issues from that post, and their subsequent performance:
|
Blog Post
|
Symbol
|
Name
|
Performance
|
|
6/23/2013
|
BBCN
|
B B C N
BANCORP INC
|
17.6%
|
|
6/23/2013
|
PB
|
Prosperity
Bancshares
|
16.9%
|
|
6/23/2013
|
BXS
|
Bancorpsouth
Inc
|
14.0%
|
|
6/23/2013
|
BPFH
|
Boston
Pvt Finl Hldgs
|
12.1%
|
|
6/23/2013
|
MTB
|
M &
T Bank Corp
|
11.3%
|
|
6/23/2013
|
HTH
|
Hilltop
Hldgs Inc
|
6.4%
|
|
6/23/2013
|
CBF
|
Capital
Bank Financial
|
6.4%
|
Last week Banking related industry groups had another
strong week with 5 of the 7 groups finishing in the top 50 of the trailing 1
week price performance list, the only exceptions being Banks-Foreign,
#85, +1.1%; and Banks-Super Regional, #105, +0.7%.
Much of this performance was driven by
investor reaction to earnings reports from the sector. Last week 86 banks
reported earnings, the table below summarizes their performance by industry
group.
|
Average Weekly Gain
|
# Reporting
|
% with Weekly Gain
|
|
|
BANKS
REPORTING EPS LAST WEEK
|
3.20%
|
86
|
|
|
Banks-Foreign
|
2.28%
|
1
|
100%
|
|
Banks-Midwest
|
7.41%
|
10
|
90%
|
|
Banks-Money Center
|
4.81%
|
5
|
100%
|
|
Banks-Northeast
|
2.58%
|
19
|
89.5%
|
|
Banks-Southeast
|
2.38%
|
20
|
80%
|
|
Banks-Super Regional
|
0.63%
|
9
|
77.8%
|
|
Banks-West/Southwest
|
3.30%
|
22
|
90.1%
|
|
Grand
Total
|
3.20%
|
86
|
87.2%
|
As the table demonstrates EPS reports from
the sector were well received with 87.2% of those reporting showing an increase
in price over the week.
The Savings & Loan sector showed similar
performance, with the 10 companies reporting averaging a 4.7% increase, and
100% showing a weekly gain. Of the 10 companies reporting, 6 had 4%+ gains for
the week. If you combine the two sectors
together, 88.5% of the 96 companies reporting finished the week with a gain.
Next week 136 banks and 37 savings &
loans will report EPS. The data listed above suggests selections from these industry groups could
continue to provide high probability positive returns.
Columbia Banking (COLB) broke out of this
short descending channel Thursday on volume +36% to average and appears to be
headed higher. COLB is under accumulation with an "A" A/D rating and
a 50 day up/down volume ratio of 2.1; institutional sponsorship has increased
256 > 266 > 275 over the trailing 3 quarters. COLB reports next Thursday, 7/25.
Flagstar Bancorp (FBC) is showing strong
accumulation as it emerges from a volatility squeeze. A/D "B+", 50
day up/down volume ratio is 1.6, and the 25 day ratio is 2.6. Institutional
sponsorship has increased 54 > 90 > 100 > 108 over the trailing 4 quarters,
and analysts forecast FY '13 EPS +149%, and FY '14 +18%. FBC announces earnings
this coming Tuesday.
This TC2000 chart shows the volatility
squeeze:
TCF Financial (TCB) is another Midwest
regional showing good accumulation. A/D "B+", with a 50 day up/down
volume ratio of only 1.1, but a 25 day ratio of 1.5. Analysts forecast FY '13
EPS +41%, and FY '14 EPS +29%. TCB yields 1.3%, and reports this coming Tuesday.
National Bank Holdings (NBHC) is a recent
IPO under very heavy accumulation. NBHC enjoys a "B+" A/D rating, and
a 50 day up/down volume ratio of 2.0. NBHC has a 19.82 pivot out of a cup &
handle base, and reports EPS this coming Thursday.
Susquehanna Bankshares (SUSQ) looks ready to
move higher out of this short two week consolidation. SUSQ reports on Wednesday.
Energy: The Sector Trends blog has been
highlighting energy issues with some regularity this year, and did a deep dive
on the sector in the May 26 blog post. The
table below shows all energy issues featured in the blog since the May 5 post,
and their subsequent performance:
|
Blog Post
|
Symbol
|
Name
|
Performance
|
|
6/9/2013
|
MTDR
|
Matador
Resources Co
|
23.6%
|
|
5/5/2013
|
GTLS
|
Chart
Industries Inc
|
17.8%
|
|
5/26/2013
|
OAS
|
Oasis
Petroleum Inc
|
12.2%
|
|
6/30/2013
|
FTK
|
Flotek
Industries Inc
|
10.0%
|
|
5/26/2013
|
SN
|
Sanchez
Energy Corp
|
8.9%
|
|
5/5/2013
|
FET
|
Forum
Energy Technology
|
7.0%
|
|
5/26/2013
|
HLX
|
Helix
Energy Solutions
|
7.0%
|
|
5/19/2013
|
ATW
|
Atwood
Oceanics Inc
|
6.1%
|
|
5/26/2013
|
DRQ
|
Dril
Quip Inc
|
4.5%
|
|
5/26/2013
|
DRC
|
Dresser-Rand
Group Inc
|
4.2%
|
|
5/26/2013
|
CHK
|
Chesapeake
Energy
|
4.2%
|
|
5/26/2013
|
COG
|
Cabot
Oil & Gas Corp
|
3.8%
|
|
6/9/2013
|
EGN
|
Energen
Corp
|
3.5%
|
|
5/26/2013
|
MRC
|
M R C
Global Inc
|
-13.5%
|
|
5/26/2013
|
TSO
|
Tesoro
Corp
|
-15.5%
|
Last week was a strong week for energy
related industry groups with 7 groups finishing in the top 50 of the 1 week
price performance list. Over the
trailing 3 weeks 8 energy groups rank in the top 50 groups as shown in the
table below:
|
Price Performance
|
||||
|
Industry Group
|
Symbol
|
3 Week Gain
|
3 Week Rank
|
Industry Group Rank
|
|
Oil&Gas-Cdn Expl&Prod
|
G1312
|
13.4%
|
4
|
156
|
|
Energy-Solar
|
G1320
|
11.1%
|
10
|
1
|
|
Energy-Alternative/Other
|
G1318
|
9.8%
|
18
|
6
|
|
Oil&Gas-U S Expl&Prod
|
G1310
|
8.6%
|
27
|
85
|
|
Oil&Gas-Field Services
|
G1380
|
8.3%
|
34
|
43
|
|
Oil&Gas-Drilling
|
G1381
|
7.9%
|
40
|
178
|
|
Oil&Gas-Machinery/Equip
|
G3533
|
7.9%
|
41
|
91
|
|
Oil&Gas-Intl Expl&Prod
|
G1315
|
7.9%
|
42
|
173
|
|
Oil&Gas-Integrated
|
G1317
|
7.0%
|
69
|
179
|
|
Energy-Coal
|
G1319
|
4.1%
|
155
|
187
|
|
Oil&Gas-Transprt/Pipelne
|
G4922
|
1.5%
|
185
|
86
|
|
Oil&Gas-Royalty Trust
|
G1311
|
-0.8%
|
192
|
186
|
|
Oil&Gas-Refining/Mktg
|
G2900
|
-1.2%
|
193
|
111
|
The data suggests production related
groups are turning the corner - note how in the table above all 3
exploration groups have low Market Smith industry group ranks compared to their
3 week price performance.
This weekly chart of the Pboe Oil Service
Index shows a breakout from a bullish ascending triangle pattern:
This weekly chart of the Russell 1000 Energy
index shows the same bullish ascending triangle and breakout, but with a close
at new highs:
The Energy-Alternative/Other
group (G1318) gained 5.6% for the week and closed above resistance:
The May 26 blog post wrote solar was "going
parabolic", and the group declined 20% over the following 4 weeks. The
group has since stabilized somewhat, and could provide opportunities:
The Oil&Gas-Field Services group has broken out
to a new post '08 high:
The Oil&Gas-Machinery/Equip group has broken to a new high:
The Oil&Gas-U S Expl&Prod group has broken above
resistance:
Oceaneering International (OII) was last mentioned in the January
20th blog post and since gained 34%. OII still looks good, and is showing
a strong "B+" A/D rating. The 50 day up/down volume ratio is a modest
1.0, but the 25 day ratio is much stronger at 1.7
Dril Quip (DRQ) is also showing significant accumulation, and
looks like a buy with a break out of this short descending channel:
FMC Technologies (FTI) is in the midst of an 8 week flat base and has
seen very heavy accumulation over the past 5 weeks. The 50 day up/down volume
ratio is a comparatively normal 1.4, but the 25 day ratio is a potent 2.3, suggesting
positive price action in the near future. FTI looks like a buy at current
levels, with an add when it hits it's flat base pivot of 59.27.
Sanchez Energy (SN) still looks good, but could be waiting for
earnings due August 8.
Continental Resources (CLR) is $1.10 away from new highs. A/D
"B+", SMR "A", ROE 22%, EPS 93, RS 76. Weekly chart.
Laredo Petroleum (LPI) looks good out of this ascending triangle
(also a volatility squeeze).
Dresser Rand (DRC) is showing modest accumulation, but looks
headed higher over time.
Noble Corp (NE) needs more accumulation but if it starts to show
up look for a solid move higher, especially if those analysts EPS estimates
come to pass. Weekly chart.
Tesco Corp (TESO) looks like a good bet to complete this cup
pattern:
Transports: Transportation related groups had a very strong week with 4
groups in the top 10 of the trailing 1 week price performance list, and 6 in
the top 40 - only the Transportation-Truck group lagged finishing #184 with a
-1.8% loss.
|
Price Performance
|
|||
|
Industry Group
|
1 Week Gain
|
1 Week Rank
|
MS Ind. Group Rank
|
|
Transportation-Airline
|
4.7%
|
5
|
36
|
|
Transportation-Logistics
|
4.4%
|
6
|
141
|
|
Transport-Air Freight
|
4.1%
|
8
|
165
|
|
Transportation-Ship
|
3.6%
|
10
|
98
|
|
Transportation-Equip Mfg
|
2.6%
|
27
|
81
|
|
Transportation-Rail
|
2.3%
|
39
|
133
|
|
Transportation-Truck
|
-1.8%
|
184
|
9
|
The Dow Jones Transportation index hit a new
high:
American Railcar (ARII) is 24% off its 52
week high, yet is seeing very heavy accumulation. Over the past week ARII's A/D
rating has improved from "C-" to "B", and its 25 day
up/down volume ratio of 2.1 confirms very heavy short term accumulation. ARII
looks like a buy at current levels.
Jetblue (JBLU) has seen heavy accumulation
over the past 3 weeks as it begins work on the right side of this cup shaped
pattern. Over the past week the A/D ratings has improved from "C+" to
"B+", and the modest 50 day up/down volume ratio of 1.2 is belied by
the robust 25 day ratio of 2.9. JBLU looks like a buy at current levels.
Southwest Airlines (LUV) has seen consistent
increases in institutional sponsorship, 772 > 847 > 931 > 950 over the
trailing 4 quarters. LUV has a 14.10 pivot out of a double bottom base.
Republic Airways (RJET) looks like a buy if
it pulls back into the 5% buy zone:
United Continental (UAL) has a 35.27 pivot
out of a 9 week consolidation:
Pacer International (PACR) has a 6.67 pivot
out of a tight 5 week flat base:
Aerospace/Defence: The Aerospace-Defense group (G3722) has
been a consistent performer, ranking in the top 100 groups since early March.
Over the last two weeks the group has jumped +29 in MarketSmith's industry group
rankings, from #57 to #28.
Textron (TXT) looks attractive here after
breaking through a 15 week descending trend line in heavy volume. TXT has a
"B" A/D rating, and its 50 day up/down volume ratio is only 1.3, but
the 25 day ratio of 2.3 reflects the strong interest over the trailing 3 weeks.
TXT reaching the top of its current consolidation around $31 looks like a
reasonably high probability outcome.
Gencorp (GY) has spent the past 3 weeks
working on a tight channel, another week or two of this type of price action should generate an attractive volatility squeeze. Not a buy yet, but one for the watch list.
Staffing: The Comml Svcs-Staffing group (G1011) is
ranked #9 on the trailing 3 week price performance list with an 11.2% gain, and
over the past two weeks has jumped +35 in MarketSmith's industry group rankings
from #94 to #59.
AMN Healthcare Services (AHS) has seen
modest accumulation over the past 8 weeks of this 16 week consolidation.
Analyst's forecast FY '13 EPS +30%, FY '14 +20%. Buy point 15.94.
Tech:
Over the past two months
the Sector Trends blog has highlighted the promising price action in technology
oriented groups, and many of the highlighted stocks have performed well.
However, when analyzing current industry
group price action it appears investor appetite for tech oriented names has
begun to wane. Semiconductors in particular look weak, but reaction to next
week's earnings reports from the sector will probably tell you what you need to
know (42 companies report). This doesn't mean current tech oriented holdings
are necessarily in any danger, but it does suggest the portion of an individual
stock's performance provided by industry group and sector strength could begin
to weaken. Traders with shorter term horizons are probably best suited making
selections from other sectors.
The table below lists the tech
oriented stocks highlighted by the Sector Trends blog since the May 5 blog
post.
|
Blog
Post
|
Symbol
|
Company
|
Performance
|
Sector
|
|
|
6/2/2013
|
BV
|
Bazaarvoice
Inc
|
38.6%
|
SOFTWARE
|
|
|
6/9/2013
|
SREV
|
Servicesource
Intl Llc
|
34.7%
|
SOFTWARE
|
|
|
6/30/2013
|
IL
|
Intralinks
Holdings Inc
|
33.2%
|
SOFTWARE
|
|
|
6/9/2013
|
QIHU
|
Qihoo
360 Technology Ads
|
32.6%
|
SOFTWARE
|
|
|
6/23/2013
|
SREV
|
Servicesource
Intl Llc
|
22.5%
|
SOFTWARE
|
|
|
6/23/2013
|
DWRE
|
Demandware
Inc
|
18.2%
|
SOFTWARE
|
|
|
6/23/2013
|
BV
|
Bazaarvoice
Inc
|
14.7%
|
SOFTWARE
|
|
|
6/2/2013
|
TNGO
|
Tangoe
Inc
|
14.0%
|
SOFTWARE
|
|
|
6/2/2013
|
CHKP
|
Check
Point Sftware Tech
|
12.7%
|
SOFTWARE
|
|
|
5/5/2013
|
WDAY
|
Workday
Inc Cl A
|
7.1%
|
SOFTWARE
|
|
|
6/2/2013
|
JIVE
|
Jive
Software Inc
|
3.6%
|
SOFTWARE
|
|
|
6/9/2013
|
VRNT
|
Verint
Systems Inc
|
2.9%
|
SOFTWARE
|
|
|
6/30/2013
|
QLYS
|
Qualys
Inc
|
-3.7%
|
SOFTWARE
|
|
|
Sector average:
|
17.8%
|
||||
|
5/5/2013
|
WBMD
|
Webmd
Health Corp
|
24.1%
|
INTERNET
|
|
|
6/2/2013
|
YNDX
|
Yandex
N V Class A
|
14.9%
|
INTERNET
|
|
|
Sector average:
|
19.5%
|
||||
|
6/23/2013
|
TTMI
|
T T M
Technologies Inc
|
13.4%
|
ELECTRNCS
|
|
|
6/23/2013
|
BHE
|
Benchmark
Electronics
|
6.5%
|
ELECTRNCS
|
|
|
Sector average:
|
9.9%
|
||||
|
6/23/2013
|
RKUS
|
Ruckus
Wireless Inc
|
17.1%
|
COMPUTER
|
|
|
6/2/2013
|
SGI
|
Silicon
Graphics Intl
|
15.6%
|
COMPUTER
|
|
|
5/26/2013
|
EFII
|
Electronics
For Imaging
|
11.6%
|
COMPUTER
|
|
|
6/23/2013
|
SSNI
|
Silver
Spring Networks
|
10.7%
|
COMPUTER
|
|
|
6/30/2013
|
ALLT
|
Allot
Communications Ltd
|
9.5%
|
COMPUTER
|
|
|
5/19/2013
|
EZCH
|
Ezchip
Semiconductor Ltd
|
3.3%
|
COMPUTER
|
|
|
6/23/2013
|
XXIA
|
I X I A
|
-15.6%
|
COMPUTER
|
|
|
Sector average:
|
7.5%
|
||||
|
6/2/2013
|
INVN
|
Invensense
Inc
|
20.6%
|
CHIPS
|
|
|
6/2/2013
|
XLNX
|
Xilinx
Inc
|
12.8%
|
CHIPS
|
|
|
5/26/2013
|
NXPI
|
Nxp
Semiconductors N V
|
10.3%
|
CHIPS
|
|
|
6/23/2013
|
DIOD
|
Diodes
Incorporated
|
6.7%
|
CHIPS
|
|
|
6/2/2013
|
MX
|
Magnachip
Semiconductor
|
3.0%
|
CHIPS
|
|
|
6/2/2013
|
ATML
|
Atmel
Corp
|
-2.3%
|
CHIPS
|
|
|
6/2/2013
|
IMOS
|
Chipmos
Technologies Ltd
|
-7.9%
|
CHIPS
|
|
|
Sector average:
|
6.1%
|
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