Sector and Industry Strength and Weakness with Stock Ideas- April 28th
Here is a chart of the most recent update concerning the last three months (ranking) Industry strength and weakness, as viewed from Prophet.net:
Top Industries
- Money is flowing into Oil and Gas equipment, as well as Foreign Telecom Services (as evidenced from the right to left ‘red to green’ flow).
- Opportunities for continued growth may lie here.
- Uptrends to examine (Oil and Gas): BTJ, CAM, DRQ, FTI, GMRK
- Uptrends to examine (Foreign Telecom): MICC
- Metals Fabrication has stayed strongest over the last 3 months, andcontinues to be the #1 industry
- Opportunities for continued growth may be decreasing soon (given its dominance at the top)
- Uptrends to examine (Metals Fab): PCP, RS, X, RYI
Bottom Industries:
- Money is flowing out of Cigarettes in a meaningful flow. This is in part by a recent large gap in MO (Altria), a Dow Component
- Residential Construction has been weak for the last three months.
- Downtrends to examine (Res. Const): LEN, MTH, KBH, CTX
Here is a graph of the most recent Sector Rotation (30 days) from StockCharts.com:
- Energy dominated the last month, marking a 6% increase. That’s generally bad for the economy and the consumer.
- Healthcare and Utilities were the only two sectors to be positive the last 30 market days
- This bodes poorly for the overall economy, and suggests that “big money” is being more defensive with their posturing
- This suggests we are in a Late Bull/Early Bear environment, yet the major indexes do not confirm this
Keep checking back, as I will be adding weekend sector and industry analysis, in addition to my daily postings.
Have you looked at large jumps in an industry leading to good investemnts or trades like OIL and Gas Equipment went from 14 to 55 to 66 in two weeks??? Something that looks worth checking out.
Jeff:
I have tested and examined large jumps in the listing above. Because the market tends to be controlled by the big money (institutions), large shifts in money flow/industry ranking can often be significant, or at least provide an edge (wind at your back) when selecting candidates. I have found successful trades more as a result of consistent money flow (red to yellow to green) rather than large jumps in ranking, but then – as a personality and trading style – I tend to stay away from ‘gappy’ or ‘choppy-trend’ stocks. I want to see a steady increase in rank, and not a big jump (other traders may think just the opposite and that’s fine).
Typically, the “jump” pattern emerges because of few stocks comprising the group listing in the chart. If the number of stocks is particularly low (15 or less) then one or two major gaps (earnings related, usually) can cause biased ‘money flow’ readings and subsequent jumps.
I will say that the recent jump you refer to is significant to me (and for further analysis) because 54 stocks comprise the industry, and over 10 stocks meet my criteria for deeper analysis (minimum price $25 and trading at least 400,000 shares per day). This tells me there is probably significant money flow, or funds being put to work in this particular industry.
Remember the rankings are numerical from 0 to 100 and are indicative of relative strength, so 100 would be the “100th percentile” of industry groups and so this particular industry is experiencing “greater than normal relative strength” indicating that there are probably candidates for trading, especially for momentum and swing traders (and possibly even position traders).
I am not recommending trade ideas here, but only saying just what you’re saying: “Hey, I’m seeing something out of the ordinary here, and I think it would benefit you to take a look at it and see if it fits with your trading style and holding period.”
Thanks for the comment, Jeff!
So you are trading stocks witha minimum price of $25? Interesting…..
Oh yea by the way thanks for the scan, Turns out one of my current profitable trades is probably in the oil and gas group…:-)
Was looking at BJT but couldn’t find the ticker.
Felix:
My apologies. The correct symbol is BTJ for Bolt Technology. It just began a fresh uptrend and has experienced above average volume (and a momentum/price high) recently.
I have corrected this in the post.
Thanks.
Jack,
I’ve chosen $25 as a minimum cut-off but typically choose stocks above $30 for my swing trades and usually above $40 for day-trades. It’s a price-movement issue, and I want to see established stocks. I’m not looking to play off news or euphoria like most short-term traders, but stable price patterns in established stocks. I find higher valued stocks (mid- to large-cap) to be most comfortable for my trading style.
When I began my career, I irresponsibly traded stocks under $10, slinging around 1,000 shares at a time (day-trading) to eek out 25c or 50c for a nice $250 or $500 profit at a time, but this burned me from a liquidity/rapid price movement (read: “Everyone running for the exit at once!”) standpoint.
Felix:
My apologies. The correct symbol is BTJ for Bolt Technology. It just began a fresh uptrend and has experienced above average volume (and a momentum/price high) recently.
I have corrected this in the post.
Thanks.
Interesting post.i think you very well can trade this weekly/monthly.