Due to holiday travel there’s only time for some brief
observations this week:
It was a solid week for the market with the major indexes
gaining ~ 1.3% for the week. Economic data continued to be positive with
durable goods orders coming in at M/M +3.5% vs. a consensus expectation of
+1.5%, and December consumer sentiment rose higher with a reading of 82.5 vs.
November’s 75.1. The Richmond Fed manufacturing index came in very strong at 13
vs. a consensus expectation of 10. New
home sales for November came in at 464K vs. 450K consensus, and the September
and October readings were revised sharply higher. New home prices gained 4.5%
for the month, and have gained 10.6% for the year, suggesting builders are
gaining pricing power.
The yield on the 10 year U.S. Treasury has increased 26
basis points over the past month to 3%. If this rate of increase were to
continue into early 2014 it could become problematic for the market.
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Industry Group Performance:
Housing: Last week’s analysis showed the Philadelphia
Housing Index breaking higher out of a 3 month ascending triangle pattern. The move
continued this past week as he index gained an additional 3.7%. Five housing
related industry groups ranked in the top 50 on the trailing 1 week price
performance list, led by the Bldg-Resident/Comml group which came in at
#5 with a 4.3% gain.
Standard Pacific Corp (SPF) was highlighted last week and gained
5.6%, followed by MTH +3%, AMWD +3%, EXP +2.8%, TPH -0.6%, and HW -1.5%. All of
these charts continue to look attractive, and TPH especially so given its
robust quarterly results and strong earnings forecasts.
Mining: Mining was the top performing sector for the week gaining 4.6%.
The Mining-Metal Ores group is on a tear ranking #11 on the trailing 5
week price performance list with a 9.6% gain, and over the last 2 weeks has
jumped +51 in MarketSmith’s industry group rankings to #108. The Mining-Gold/Silver/Gems
group ranked #4 in price performance last week with a 4.5% gain, but still lags
far behind with a MarketSmith industry group rank of #195.
Media: Media related groups had a very strong week
with all 5 groups ranking in the top 36 on the trailing 1 week price
performance list, and the blog calculates media was the second best performing
sector last week with a 3.8% gain. Two weeks ago the sector had only 1 industry
group ranked in the top 50 of MarketSmith’s industry group rankings, now there
are 3 groups ranked in the top 40.
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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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