WEEKLY TREND REPORT FOR 12/09/19
(free content, published before the launch of our new site)
CORE GLOBAL MARKETS OVERVIEW
The S & P 500 (SPX) closed the week up 4.93 points, +.16%, at 3145, which is a new all-time weekly closing high. The S & P is in a major uptrend on all time frames, and is technically bullish here and above 2945, which is the rising 40-week moving average. Key leaders such as Apple (AAPL), Microsoft (MSFT), JP Morgan (JPM), Bank of America (BAC), AliBaba (BABA), Google (GOOGL) and Merck (MRK) continue to make new highs, a bullish signal.
The Nasdaq closed the week down 8.94 points, -.10% at 8656. Nasdaq is also in a major uptrend and buyable above the 40-week moving average at 8037.
10-year US Treasury yields closed the week up .66, +3.72% at 1.842. After finding a bottom just under 1.50, yields have started to move higher, with alot of congestion in the 1.60 to 1.85% range. I am avoiding any bond market and rate sensitive positions for now, in either direction. The battle is being fought longer-term between 1.50 and 2.00 for now.
Gold closed the week down 7.60, -.52% at 1465, and remains in an intermediate term downtrend of lower highs and lowers lows, stuck below 1500 and the declining 10-week moving average. I am neutral as well on Gold and Gold miners, with Gold trading under 1500. 1400 is a key longer-term support level.
West Texas Intermediate Crude oil closed the week up 4.03, +7.30%, at 59.20 and is at the top of the major 50-60 range. Crude is up 6 of the past 9 weeks since it’s last test over below 51. 60 is key resistance overhead, and a close above 61 could signal a new leg higher. I am neutral on crude oil here, but do have some Energy equity exposure.
Top 10 Core ETFs, ranked by daily RSI
1. XLV, Healthcare
2. XBI, Biotech
3. XME, Metals & Mining
4. XLP, Staples
5. EWJ, Japan
6. XLF, Financials
7. IWM, Small Caps
8. SPY, S&P 500
9. IWD, Russell 1000 Value
10. QQQ, Nasdaq 100
THIS WEEK’S SECTOR SPOTLIGHT
I am focusing this week on the Metals and Mining Sector ETF, XME, and the group of stocks within. This group has been a core group of interest for me going back to 2006. Industrial metals, steel, copper, aluminum, and other base metals are considered very cyclical and often offer outsized price moves, in both directions.
I added XME to our “Best Ideas List” on Nov. 12 at $27.50 with a 12% stop, at 24.20. XME closed Friday at 28.60, a 4-month closing high, and had it’s first full week above the 40-week moving average since July 2018. This is bullish price action for the ETF and the group. XME has been up 7 of the last 9 weeks, and has made three higher lows. Single stock names of interest in the group are ArcelorMittal (MT),(which I am currently long), US Steel (X), AK Steel (AKS), Arconic (ARNC), Steel Dynamics (STLD), Freeport-McMoRan (FCX), and Alcoa (AA). AKS was on our “Best Ideas List” as well in mid-November coming off the 200-day moving average, and has had a solid 27% move since then. It is worth noting that this is a very volatile group, with high betas, and the stocks are subject to wide price swings. I do use wider than average stops in the single name positions to allow for the extra volatility. If this group continues to pick up, it could provide outsized returns.
ArcelorMittal (MT) WEEKLY
First weekly close above the 40-week MA since June 2018
US Steel (X) WEEKLY
(.10 below the 40-week moving average)
Freeport-McMoRan (FCX) WEEKLY
The top 20 ranked “Core Blue Chip Names” in my focus group are heavy in Healthcare, Technology and Financials.
In order, ranked by Daily RSI:
(1-10) JNJ, JPM, UNH, BMY, BABA, BSX, NKE, TGT, TAL, MSFT,
(11-20) BAC, AAPL, SHOP, GOOGL, MLM, HAL, AMD, MT, FB and MS.
PULLBACKS IN UPTRENDS
Finally, the Top 10 “Pullbacks in Uptrends” names in my Large Cap focus group:
ABBV, DIS, GE, HD, INTC, JD, KSU, MAS, PSX, UTX
In summary, I continue to be technically bullish on equities across the board, with SPX over 3000, especially high Relative Strength groups in healthcare, technology, financials, home construction, building materials and cyclical names. Pullbacks have been shallow for now. Japan is very strong, as has been Europe. Long-term turnaround ideas are in industrial metals, energy, Europe Financials, and China internets. I am neutral at best on US Treasuries, interest rate sensitive trades and Gold.
Have a great week.