The auto sector has been slowly climbing a wall of worry. Donald Trump adding his 140 characters has made everyone look at the auto charts the last few days! But more importantly, the investors are already rolling on these wheels.
First of all, the auto sector was one of the worst performing sectors last year. In a big up year (2016) for the markets, the car guys were not being bought. Here is a look across the worst performing industry groups in the US markets. The Autos were down 4.56% in the '% change' column. Automobile parts (-1.71%) and tires (-5.75%) were also in the "poor performers" industry list in 2016.
There has been some rotation into more defensive stocks this week, so I thought I would highlight Saputo this week. The chart looks set to deliver more solid gains. Saputo has a big uptrend going, but recently pulled back for about 6 weeks. When investors jumped into Financials in November, they were selling Saputo by looking at the chart. Friday price action is interesting. It gapped open, shot up, then traded near the lows to close out the week. All of the other indicators are giving positive signals. The MACD is turning up, the SCTR is pushing back above 75, the volume doubled on the breakout, and the relative strength downtrend apeears to be breaking.
Well, another year of Fed meetings and another December 0.25% rate increase with predictions for a more aggressive pace next year. So in a day where we got what we expected why did the market wobble this time? At the last Fed meeting (October), we got what we expected and it marked the November low in the markets and the US Dollar.
The market has been on a tremendous run. In Canada, the Energy sector has picked up the leadership and surged again today. The RSI suggests we are getting close to an extreme. This can still run for many months, but you need to look for selling opportunities to lock in profits and rotate into something else that might have some big upside.
The Canadian Energy sector got a major boost on Tuesday. The Canadian government allowed two existing pipelines to be upgraded but blocked the new pipe proposal from Enbridge. This announcement coincided with the OPEC meeting. This has created a significant move in the Canadian energy sector stocks.
Recently, the market has experienced a Trump Jump on the back of the overnight lows on election day. Surging forward, anyone who had either pulled back from the market or was caught watching and waiting has seen the $INDU chart up 5 days in a row since the election. But there is more. It seems regardless of the space, some of the moves have been parabolic. For some reason, the airlines have suddenly taken off in time for Thanksgiving. Marijuana legalization was on some of the voter ballots. Canopy Growth Corporation, a legal marijuana growing entity in Canada, has gone ballistic. Manulife Financial, a large Canadian insurer that wandered sideways to down for a couple of years, has gone vertical, and in the bottom right, Hudbay Minerals has gone parabolic.