One of the hurdles to being a great market analyst is understanding the shifting sands of the stock market without an end point. In a baseball game, momentum may swing to and fro, but the game has an ending, based on innings and score, that defines when the game is over. The stock market, by contrast, wakes up renewed every day with new clues and no predefined terminus as to where momentum is going.
Healthcare (orange) continues to be a below-average sector in the market since the 2018 Santa Claus low. The defensive sectors are on the right-hand side. Consumer Staples, Healthcare and Utilities have been the worst performers since the lows. Meanwhile, even though all the talk is usually about technology, the industrials are raging relative to every other sector.
This week saw a surge in some energy stocks. 8 of the top 20 (40%) of the biggest movers for the week shown below are in Energy. Consumer Discretionary had 3, Staples had 2 and Healthcare had 2, whereas Industrials, Financials, Technology, Staples, Materials and Utilities had 1 each. Only 1 was in the Industrial group, which has had the biggest move off the lows shown above. It is this shifting leadership that makes it so hard to continually outperform the market. Energy is the second best performer off the lows, but now has 8 in the top 20 this week.
The point I want to make is that commodities can have explosive rallies and need to be owned near the lows, not as they make new 52-week highs. Energy stocks are just getting rolling. None of the energy stocks are in the top 25% defined by the SCTR ranking - the best one on the list is barely at 53%. However, that is the nature of the commodity-related trade, which swing wildly within channels from low to high. With the new momentum shown this week, it looks like more Oil and Gas stocks could start a run here.
For more, check out this week's Weekly Market Roundup video! I work through all the bullish indicators from a sentiment perspective. The $USD and other currencies are a big focus this week as the Yen and the Euro sit at important support. I am watching for confirmation from currencies, bonds and global markets, which may converge to show their direction over the next few weeks. Click here to view the Weekly Market Roundup 2019-02-16.
Wednesday's Market Buzz was a must-watch edition discussing prominent stocks in the software industry that you've never heard of. You can find the new Wednesday Edition of Market Buzz on the StockCharts TV
Friday's instalment covered off trading oil stocks compared to software stocks and how to approach them differently.
Here is the latest Canadian Technician video, dealing with the Canadian Markets.
There will be a new one out on Sunday, February 17th. Check my Vimeo channel for the video there.
If you would like to learn more about the basics of charting, check out Stock Charts for Dummies. The first section of the book walks through all the chart settings you need to help you get the charts you want, the second section explores why you might use charts for investing and the third section is about putting it all together.
If you are missing intermarket signals in the market, follow me on Twitter and check out my Vimeo Channel. Bookmark it for easy access!
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts for Dummies
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