The week that finally bounced! It is always difficult to buy stocks near the lows. The volatility is high and your afraid of further drops. While we never know when the final low will be in advance, we have lots of tools that helps us see an oversold market. That was the case for the bounce we experienced this week as well.
With the bounce, its always good to see what sectors try to lead out of the hole. Materials were clearly one of the leaders.
Within Materials, there were a couple of themes. CF and Mosaic are both in the Fertilizer space. They both shot up. In coatings, Dow Dupont and Sherwin Williams were soaring. There was also Ball Corp which is a personal products packaging company (that does a whole lot more!).
We saw lots of defensive names make fresh new highs this week. Looking through the stocks in the list above this week, Ball soared to new highs. As we see defensive stocks starting to catch a bid, this company makes the metal containers for hair sprays, shaving cream, beer cans etc. So it can be defensively oriented and the stock soared to new highs as soon as the overall market bounced. This is nice as the stock consolidated after breaking out and now has the energy to move higher.
I like the moves we saw in both of the fertilizer stocks as well. When you break out from deeply oversold conditions, stocks hitting fresh new highs can be a big clue. Stay with winners in a weak market!
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Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts for Dummies
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