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A Study of Sector Rotation during year 2021 [Market Rotation]Sector Rotation Analysis starting from Jan 2021 While 2020 was a wonderful year for many investors, 2021 has been riddled with changes in the stock market thus far. In this analysis, I compared multiple ETFs that track different specific sectors in the market in order to visualize these changes. The periods and commentary are broken down month by month with the sector leaders and losers of that month. A little about Sector Rotation: Sector rotation in the market tends to follow the stages of business cycle—recovery, expansion, slowdown and recession. Recovery During the Recovery stage, feds will keep interest rates low while long-term rates rise. The material, financial, and industrial sector tends to take the lead during this phase. Expansion During the Expansion stage, the economy will expand at a stable pace while fed take a neutral stance on rates but credit conditions will ease. Again, long-term rates increase. Financials, Industrials, Technology, and Consumer Discretionary sectors will excel in this phase. Slowdown During the Slowdown phase, the economy peaks then starts to stagnate as inflation grows. At this point, credit conditions will be strained and stocks may fall. The sectors that do best in this phase are Consumer Staples, Energy, Health Care, and Materials. Recession During a Recession, the economy shrinks and feds cut rates. Long term rates decrease. Healthcare, Utilities, and Consumer Staples will do best in this phase. 2021 Sector Rotation Commentary During January , we tested all-time highs for the most part. Several events that occurred were the Senate run-off, the inauguration of President Joe Biden, and even the GameStop Frenzy. In world news, the number of Covid-19 cases were spiking and investors were optimistic that the vaccine would become available and help open the economy back up. Chair of the Federal Reserve, Powell pledged that the central bank will leave interest rates near zero. During early January, Energy was king of the sectors but mid-way through was overthrown by Real Estate and Communication Services. The sector losers of January were Energy, Financials, and Materials. February kicked off Earnings Season and we saw higher-than-anticipated numbers with a lot of companies beating Earnings expectations. One of the main events that occurred during February was the Treasury Yield started increasing significantly, this sent growth and tech stocks plummeting down (as they would be impacted more than established companies with well-balanced sheets and already sustainable revenue). A lot of low to mid cap stocks were significantly impacted by the rising yields and even up to today as I am writing this, still has not recover fully ($FUBO, $NIO, $PLTR, $SPCE). We saw a rotation from growth to value stocks. The Energy sector took reign over Real Estate while Communication Services rose steadily too. The sector losers of February were Materials, Health Care, and Consumer Staples sectors. Early March was the bottom of the sell-off that started towards the middle of February. Some notable events were the Suez Canal mishap, several banks getting slapped with margin calls worth Millions of dollars due to exposure from Archegos, and the $1.9 Stimulus was finally passed! The stimulus benefited the banks, airlines, and other consumer discretionary stocks so we saw a slight rally in cause of the news. Real Estate, Energy, and Finance continue to lead amongst the other sectors while Technology, Consumer Staples, and Healthcare continued to remain sector losers. It's Early May now and the market is starting to look both frothy and toppy. You can see a slight decline/curve from all sectors in the most recent period. Earnings Season is still going on but we saw many companies that met or exceeded expectations, sell-off after reporting earnings. We have also seen an increase in the VIX (volatility indicator) as a reaction on several news such as President Joe Biden's proposal to increase tax on corporations as well as the wealthy. The sector leaders today are (1) Energy, (2) Financials, and (3) Real Estate while the Sector Loser goes to Technology. I hope this analysis is able to give insight on the current market in regards to different sectors. If there's one thing that is apparent in this analysis, it is that the rotation from growth stocks to value stocks continue. While Tech stocks were a favorite during the Covid-19 lockdown, Tech has been overthrown in favor of everyday necessities like Energy and Financials this year. -Natalie Garces, OptionsSwing Analyst
AMEX:SPY
by optionsswing
6
ASX:XMM - Keep a close watch on sector and companiesASX:XMM - Keep a close watch on sector and companies ~The sector is in an uptrend after making a bottom in Jan 2016 ~the previous high was made in Nov 2008 ~after a gap of close of 13-14 years sector has come to the limelight. ~Strong global demand ~China demand for minerals ~ Global infrastructure post-COVID-19 - Govt push ~DON't forget over 50% of the consumption of iron ore is from infrastructure ~Iron ore consumption worldwide increasing steadily ~ ASX listed companies in my watch list. 1. $BSL 2. $CHN 3. $DEG 4. $ILU Trend analysis Fundamental analysis Beyond technical analysis
X
by Peaceful-Weekend-Investing
1
Yields & Sector RotationI put this template together to track sector rotations based upon yield changes. Since August 2021 rates have incrementally risen on the 5,10, & 30 year treasuries (top pane). This provides support for value outperforming growth (second pane), illustrated by the Russell 1000 Value ETF outperforming the Russell 1000 Growth ETF. Finally, to visualize this effect on the sector front and aid in portfolio allocation in the future I show the top 2 value sectors (financials and industrials, traditionally) and the top 2 growth sectors (tech and healthcare, traditionally).Enjoy! @LamontyTrades on Twitter
TVC:US10YLong
by Vol_to_Valuation
1
Treasuries Fall, Stocks Rise, Commodities Rise - US Markets WrapU.S. stocks rose by 1.1% today fueled by a 2.1% increase in small cap stocks and a 3.5% increase in energy stocks. The S&P 500 Index is currently up 0.5% year-to-date, and up 7.7% over the past 12 months. The Dow Jones Industrial Average is currently down 8.2% year-to-date, and down 2.0% over the past 12 months. Elsewhere, commodities climbed 1.6% with gold rising 1.0%, crude oil rising 4.0% and copper rising 0.7%. The yield on 10-year Treasuries is 0.85%, while the dollar strengthened by 0.1% against a basket of other currencies. Meanwhile, investment grade corporate bonds rose by 0.2%, and high yield bonds fell by 0.2%. These are the some of the main moves in markets: Stocks The S&P 500 Index rose 1.1%. The Dow Jones Industrial Average rose 1.6%. The Nasdaq Composite Index stayed level. The Nasdaq 100 Index rose 0.2%. Large cap stocks, as represented by the S&P 100 Index, rose 0.7%. Mid cap stocks, as represented by the S&P MidCap 400 Index, rose 2.0%. Small cap stocks, as represented by the S&P SmallCap 600 Index, rose 2.1%. Bonds The yield on 1-year Treasuries remained unchanged at 0.12% today. The yield on 5-year Treasuries increased by 4 basis points to 0.38% today. The yield on 10-year Treasuries increased by 6 basis points to 0.85% today. The yield on 30-year Treasuries increased by 6 basis points to 1.62% today. Credit Investment grade corporate bonds tracked by the Markit iBoxx USD Liquid Investment Grade Index rose by 0.2%. High yield bonds tracked by the Markit iBoxx USD Liquid High Yield Index fell by 0.2%. Emerging market bonds tracked by the J.P. Morgan Emerging Markets Core Index fell by 0.2%. Commodities The S&P GSCI Total Return Index, the leading measure of general commodity price movements, rose by 1.6% West Texas Intermediate crude oil rose by 4.0%. Gold rose by 1.0%. Copper rose by 0.7%. Silver rose by 1.9%. Currencies The Deutsche Bank Long US Dollar Index, which measures the greenback against a basket of other currencies, strengthened by 0.1% to $25.4 today. The Euro weakened by 0.1% to $1.16. The British pound weakened by 0.3% to $1.29. The Japanese yen strengthened by 0.1% to 104.77 per dollar. Cryptocurrencies Bitcoin rose by 0.3% to $13620 today. Ethereum rose by 0.7% to $385.97. Tether declined by 0.0% to $1.00161641180113. XRP declined by 1.4% to $0.24. This story was produced by the Kwhen Automated News Generator. For more articles like this, please visit us at finance.kwhen.com. Write to editors@kwhen.com. © 2020 Kwhen Inc.
AMEX:SPY
by kwheneditors
Nasdaq Week In Review - 10/19/2020 - 10/23/2020The Nasdaq Week in Review is my weekend homework where I look over what happened in the previous week and what might come in the next week. It helps me evaluate my observations, recognize new data points, and make a plan for possible scenarios in the near future. If you find this helpful, please let me know in the comments. I'm also more than happy to add new perspectives and data points if you have ideas. The structure is the following: A recap of the daily updates that I do here on TradingView. Larger view on the past week What's coming in the next week Key index levels to watch out for Wrap-up -=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Monday, October 19, 2020 Pray tomorrow takes me higher Facts: 1.65% lower, Volume higher, Closing range: 8%, Red Body: 78% Good: Held above 21d EMA , volume still not super high Bad: Almost everything, start up 1% but go down the whole day Candle: 78% red body with 8% closing range. Advance/Decline: 0.35, twice as many stocks declining than advancing Sectors: All sectors were down, but Utilities ( XLU ) was the best performing of the day. Energy ( XLE ) led with gains in the morning. Technology ( XLK ) and Communications ( XLC ) were worst of day. Expectation: Sideways or Lower The stock market opened the week on a sour note on Monday. After being up 1% at open, the market quickly turned and trended downward the entire day. The Nasdaq finished the day -1.65% lower on higher volume (my indicator above is from QQQ ). The candle is a large red body of 78%, with a short upper wick from the morning gains. A closing range of 8% shows we ended the day at the bottom. There were twice as many declining stocks than advancing. Although volume was higher, it is still lower than recent average volume . The index is testing the October support area as well as the 21d EMA. The S&P500 lost 1.63% on the day. None of the sectors ended the day with gains. Utilities ( XLU ) performed the best. Energy ( XLE ) had early morning gains before pivoting and losing ground. Communications ( XLC ) and Technology ( XLK ) were the worst performing of the day. If the 21d EMA support can hold, then a small gain around 0.80% might be expected. That would continue the trend from the 10/12 pivot and also meet up with the 5d line and the trend line from the 9/23 bottom. With good news on stimulus or the pandemic, that could bring the index back to it's longer trend from early September which points to a 4.21% gain. However, the index is trading in the lower half of that regression channel. Continuing today's downward trend would take the index below the 21d EMA for a -1.93% loss. It would likely get support at the 50d MA as well as the September support area of 11,300. Going further than that would be a very negative signal and we would put our eye on the July support area of 10,600. -=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Tuesday, October 20, 2020 I know why you want to hate me Facts: 0.33% higher, Volume higher, Closing range: 28%, Red Body: 9% Good: Stayed above yesterday’s low and holding above 21d EMA Bad: Very choppy day with selling into close Highs/Lows: Lower high, Higher low (Inside day) Candle: Inside day, 9% red body with 28% closing range. Advance/Decline: 1.18, slightly more advancing than declining Sectors: Utilities ( XLE ) finished the day on top. Consumer Discretionary ( XLY ) and Finance ( XLF ) led at mid-day but fell off. Consumer Staples ( XLP ) was the worst performing. Expectation: Sideways or Lower It was a choppy day with many moves back and forth. After being up 1.34% at one point in the day, the Nasdaq dropped in afternoon selling, ending the day with a 0.33% gain. The candle has a thin negative body of 9% and a lower closing range of 28%. The inside day (recognized by the price range being within the previous days range) often marks a continuation of the current trend. There were slightly more advancing stocks than declining stocks. Although volume was higher, it is still lower than recent average volume . The index is still testing October support area and the 21d EMA . Breaking the 21d EMA would be a negative signal. The S&P500 gained +0.47%, with Utilities ( XLE ) ending the day as the leading sector. Consumer Discretionary ( XLY ) and Financials ( XLF ) both led at mid-day but lost those gains in the late afternoon. Consumer Staples ( XLP ) was the worst performing sector today and the only sector with a loss. The mega-caps all saw gains with Apple ( AAPL +1.32%) and Google ( GOOG +1.39%) outperforming the indexes. Microsoft ( MSFT +0.20%) and Amazon ( AMZN +0.31%) turned in smaller gains. Growth stock Tesla ( TSLA -2.06%) continues to lose ground heading in Wednesday earnings . Logitech ( LOGI +15.76%) had a huge gap up after bearing expectations. Some 2020 favorites such as Zoom (ZM -5.51%), Datadog ( DDOG -2.75%), and Pinterest (PINS -1.09%) had losing days. Snap (SNAP -0.74%) is up over 22% after hours after also smashing expectations. As for expectations, a lot depends on news coming from ongoing stimulus discussions. A positive sign of an agreement could have the index bounce of this support area and move up +3.65% to rejoin the trend line drawn from the 9/23 bottom. Another potential outcome is that stimulus talks continue and investors remain optimistic which could result in a +1.02% gain, continuing today’s trend line and rejoining the trend from 9/3. The index is trading in the lower half of all these regression trends. However, there seems to be good support at the 21d EMA and so a downward move looks like it would be limited to a -0.22% loss. That would continue along the trend drawn from the pivot on 10/12. If investor sentiment were to worsen, the index could break through the 21d EMA and then hopefully find support at the 50d MA. -=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Wednesday, October 21, 2020 Have you heard about the Lonesome Loser? He's a loser but he still keeps on trying. Facts: 0.28% lower, Volume lower, Closing range: 6%, Red Body: 33% Good: Still holding above 21d EMA Bad: Another choppy day with selling into close Highs/Lows: Lower high, Higher low (Inside day) Candle: Inside day, 33% red body with 6% closing range. Advance/Decline: 0.61, ratio of 3:2 decliners to advancers Sectors: Communication Services ( XLC ) stole the day as the big winner. Energy ( XLE ) was the worst performing. Expectation: Sideways or Lower Wednesday was a continuation of Tuesday with an attempt to make gains that sold off in a choppy fashion throughout the rest of the day. After gaining 0.84%, the Nasdaq dropped to close with a -0.28% loss. The candle has a very tiny lower wick with a 33% red body and 6% closing range. Another inside day (recognized by the price range being within the previous days range) shows little direction in which way the market will go. There were more declining stocks than advancing stocks at a ratio of 3:2. Volume was lower than the previous day and continues to be lower than recent averages. The index is still testing October support area and the 21d EMA . Breaking the 21d EMA would be a negative signal. The S&P500 lost -0.22%, despite all the efforts of Communication Services ( XLC ) sector which gained 1.68%. Most of the other sectors incurred losses of around 0.5%. Industrials ( XLI ) lost -1.01%. Energy ( XLE ) was the worst performing sector with a loss of -1.91%. Google ( GOOG +2.4%), Facebook ( FB +4.17%) and Twitter ( TWTR +8.39%) drove huge gains in the Communication Services sector, possibly all helped by the Snap (SNAP +28.30%) earnings beat which earned the social platform a massive gain. Netflix ( NFLX -6.92%) retreated on news of lower than expected earnings and slowing subscriber growth. Other mega-caps Apple ( AAPL -0.24%), Amazon ( AMZN -1.0%) and Microsoft ( MSFT -0.09%) did not fair as well with Apple and Amazon closing below 21d EMA and 50d MA lines. Tesla ( TSLA +0.17%) announced an earnings beat after market close and is up over 3% in after hours trading. Recent growth favorites Peloton (PTON -5.78%), Fiverr ( FVRR -9.30%) and Datadog ( DDOG -5.91%) are all losing recent gains. The trend lines provide a few possibilities, but much still depends on news coming from ongoing stimulus discussions. With some positive news, a gain of +3.70% would rejoin the trend line drawn from the 9/23 bottom. If the mega-caps and a breadth of stocks of regain ground, a more likely result would be a +1.39% gain, rejoining the trend from 9/3. With all but XLC having a challenging Wednesday, the big test for Thursday will be whether the index can hold above the October support and 21d EMA lines. That support looks in jeopardy at this point given the momentum. A downward move looks like it would be around -0.52% loss, possibly dipping below the 21d EMA and then coming back up to as a resistance line. That would continue today’s trend line and the trend drawn from the pivot on 10/12. If investor sentiment were to worsen, the index could go further below the 21d EMA and then hopefully find support at the 50d MA. -=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Thursday, October 22, 2020 Livin’ on a prayer. Facts: 0.19% higher, Volume lower, Closing range: 76%, Red Body: -12% Good: Reversed from morning lows to end day positive Bad: Dipped below 21d EMA Highs/Lows: Lower high, Lower low Candle: Looks like a hammer , 12% red body with 76% closing range. Advance/Decline: 1.76, more advancers than decliners Sectors: Energy ( XLE ) had a huge 4.13% gain. Financial ( XLF ), Health ( XLV ) and Utilities ( XLU ) also had good days. Expectation: Sideways or Higher Finally, there is a bit of character change in the market. After several days of morning gains selling off in afternoon trading, the opposite happened on Thursday. A big morning loss that took the index below the 21d EMA was bought back in the afternoon to end the day with gains. The Nasdaq ended the day with a 0.19% gain. The candle, with a 76% closing range and 12% red body looks like a reversal hammer . That will need to be confirmed with the next few days of trading. Volume was lower (my indicator above is based on QQQ volume ) for the Nasdaq and continues to be lower than average volume in recent weeks. For a true hammer candlestick , we'd want to see higher volume . There were more advancing stocks than declining stocks at a ratio of 1.76. It’s a positive sign that the index regained it’s ground and closed above the 21 day EMA . The S&P500 had a similar pattern and closed the day with a 0.52% gain, led by Energy ( XLE +4.13%) and Financial ( XLF +1.99%). Most of the sectors saw gains on the day. Technology ( XLK -0.24%) and Real Estate ( XLRE -0.70%) were the worst performing. The Russell 2000 Index had gains of 1.65% as investors looked for good opportunities in small cap stocks. Google ( GOOG +1.38%) led the mega-cap stocks with it’s second day of solid gains. Apple ( AAPL -0.96%) and Amazon ( AMZN -0.27%) had losses on the day and continue to trade below their 50 day MA. It would be a positive sign for an overall upward trend if these mega-caps got back above this key line. Chevron ( CVX +3.57%) and Exxon Mobil ( XOM +5.13%) along with almost every energy stock saw gains after talk of consolidation in the industry and layoffs at Exxon. Snap (SNAP +6.77%) continued it’s rally after an earnings breakout. Several growth stocks such as Restoration Hardware ( RH +4.34%) and Zoom (ZM +1.43%) had gains after several days of losses. This is all a good sign, but needs to be confirmed with additional gains from more growth stocks. If the candlestick hammer is confirmed and we see gains from here, trend lines point to two possibilities. The first is a +1.01% gain in the area between today’s trend line and the trend drawn from the 9/3 correction start. Additional positive news could accelerate gains to reach the trend line draw from the 9/23 bottom. That would mean a +3.42% gain. If the index cannot hold above the 21d EMA , then the 5 day trend and trend from the 10/12 pivot would point to a -1.50%. This is where the 50d MA line is at and where we’ve seen support from September trading. -=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Friday, October 23, 2020 We were runnin' against the wind Facts: 0.37% higher, Volume lower, Closing range: 100%, Green Body: +11% Good: Held above key support at 21d EMA Bad: Low volume , not much price movement Highs/Lows: Higher high (by a fraction), higher low Candle: Long lower wick as investors bought up the lows to end nearly where the day started. Advance/Decline: 1.63, more advancers than decliners Sectors: Communication Services ( XLC ) led the day with +0.94% gain. Consumer Discretionary ( XLY ) also had a good day at +0.88%. Expectation: Higher One more day of reversals to close a choppy week. Every day this week had a morning move that reversed once or more by close. Earlier in the week it was higher highs that reversed to lower lows. At the end of the week, it was lows that reversed to close with gains. Today the Nasdaq ended with a +0.37% gain. The candle has a tiny 11% green body and 100% closing range as the day ended at its high, but not much above where it started. There were more advancing stocks than declining stocks at a ratio of 1.63. Volume was lower than the previous day and much lower than average volume over the past few weeks. The index tested the 21d EMA again and stayed above it. The S&P500 had an even tighter range between open and close and ended with a similar +0.34% gain. Communication Services ( XLC +0.94%) had the best gains among sectors fueled by positive gains from social platforms. Consumer Discretionary ( XLY +0.88%) also did well today, with a mix of discount retailers, auto parts and restaurant/service companies doing well. Technology ( XLK -0.11%) and Energy ( XLE -0.49%) were the worst performing of the day. The Russell 2000 capped off a winning week with another +0.88% gain. Google ( GOOG +1.59%) continued the momentum it has gained the last few weeks while Microsoft ( MSFT +0.62%) and Amazon ( AMZN +0.88%) finally found some support with significant gains. Apple ( AAPL -0.61%) and Amazon remain under their 21d EMA and 50d MA lines. The story of the week has been Snap (SNAP +10.78%) which continues to have incredible gains after it’s earnings release. More growth stocks have turned back toward gains which is a positive sign for continued gains next week. Continuing today’s trend into Monday would mean around a +0.66% gain, splitting the difference between the 1d trend line and the trend drawn from the 9/3 correction. The trend from the 9/24 bottom is +2.67% from today’s close and is a possibility if good news comes over the weekend to fuel gains. As the index continues to test the 21d EMA , it’s possible it can find itself below that line. That would continue this past week’s trend to a -1.29% loss and land under the October Support area . Further losses would find the 50d MA and the index would likely get support at that level. -=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Larger View on the Week This was not an easy week to be trading in the stock market. It started with a huge disappointment on Monday where the market started with gains and then quickly lost them for a 1.65% loss. And the rest of the week traded in the lower half of Monday's range, testing October support area and dipping below the 21d EMA once. the closing range on the week is 44%, not terrible but also not great. There were some good signs. Despite the dip below the 21d EMA, the index recovered and otherwise traded above that key support line. The character of Monday to Wednesday of higher opens and lower closes changed on Thursday and Friday with lows turning into intraday highs and closing at the upper range of the day's candles. The closing range on Friday was 100% as the market was on an uptrend heading into the weekend. That's good support at the current price range to build a base going into next week. US Treasury Yield spreads were up for the week and continue to be on an upward trend since dipping in mid-July. This is a good sign from investors that they staying out of the bond market and in the stock market. Looking at the mega-caps, Microsoft (MSFT), Apple (AAPL) and Amazon (AMZN) were down on the week with -1.56%, -3.34% and -2.09% losses respectively. Google (GOOG) and Facebook (FB) had great weeks, with +4.32% and +7.09% gains and driving huge gains in the Communication Services sector, specifically social platform stocks. Pinterest (PINS) had a 20% gain. There was the amazing Snap (SNAP) earnings release and 50% gain of that stock. Twitter (TWTR) was up 10%. Beyond those, there were a lot of mixed results. Many of the growth stocks had a tough week although turned in positive gains on Friday. On a daily average, there were more advancers than decliners, but the value of the declines were bigger. Clearly Communication Services (XLC) was the winning sector of the week, but there was also some back and forth in that race. Consumer Discretionary (XLY) came into the week as the leader, with early gains that faded later in the week. Energy (XLE) had a huge day on Thursday with +4.13% gains that put it at the top of the sectors for a day before giving up the lead to Communication Services on Friday. Financials (XLF) had a good week and Utilities (XLU) continues to turn in consistent performance as a safe bet for conservative investors. It's not often that Technology (XLK) finds itself at the bottom of the sector list, and that is really where to story begins for next week. -=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=- The Week Ahead The next week will be a pivotal one for where the market goes next. The questions for the indexes will be whether they can continue the character change from Thursday and Friday and turn that into gains early in the week. They are still testing key support areas and the 21d EMA, often used by investors as an indicator of market health. Economic news will include New Home Sales, Consumer Confidence and Q3 GDP and are all expected to increase. Positive news in these economic indicators could give the market a boost. However, probably more attention will be paid to big earnings releases happening next week. There is a huge number of earnings reports scheduled, with a high concentration of technology stocks. Given the technology sector just had an awful week and still influences the broader stock market heavily, the positive and negative earnings reports could have a huge impact. Microsoft (MSFT) will announce on Tuesday, 10/27 and Apple will announce on Thursday 10/29. Shopify (SHOP) which has had a huge growth year, also reports on Thursday. Of course, you can't discount the influence of the election and the continuing worldwide pandemic. The election seems to already be priced in, but uncertainty around the results and how the candidates will react in either direction is making everyone nervous. The pandemic is accelerating with new highs in daily case counts and people are watching closely what that does to hospital bed availability and death rates worldwide. -=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Key Nasdaq Levels to Watch There are several key levels in the Nasdaq to keep an eye out for and respond accordingly. First on the positive side: 11,642.87 is the current 10d Moving Average. Getting above this line would be a good sign that the turning character from the end of the week is continuing to build momentum. Next would be to make it above the high of 10/12 at 11,965.54 which was the downside pivot day from October gains. Passing 12074.06 would be a new all time high and a clear sign that the bull market is intact and the short September correction is over. On the downside, there are several key levels to raise red flags, many similar to what we watched for last week: 11,400 is the October support/resistance area. The index dipped below this line briefly on Thursday. This is where the 21d EMA is at now. 11,369.29 is last weeks low. Let's hope we do not find a new low this week. Things would get more serious if we went below the 11,300 September support area . A lot of time was spent at this level going back and forth before finally breaking back above. This is where the 50d MA is at now. The next area to watch would be the July support area at 10,600. If we were to see a significant pullback this week, then the hope is we'd at least stop at this level. If we break through here, there is danger of a much more damaging decline. Beyond the July area, there is not much to hold back the index from dropping to the June support area of 10,000. There were only 2-3 days in early July that we were trading between these two levels. At the 10,000 level, there would be a lot of support from the round number psychology as well as the 200d MA. -=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=-=x=- Wrap-up Next week will certainly be an intense one to watch. Will we have huge gains from positive economic news and earnings reports? Or will the news disappoint and we have big losses? Or maybe, nothing. Maybe more sideways because investors just want to wait and see on the election and coronavirus news. Either way, it's important to have a plan. Watch for the key levels in the market, and weigh your exposure against the level of risk you see. Making smaller bets and adding after things go you way is a good approach. Raising cash and waiting it out is also a valid strategy for uncertain weeks. Good luck and trade safe!
NASDAQ:IXIC
by drewby4321
Sector Winners and Losers week ending 10/23This week it was all about Communication Services (XLC) with the positive earnings beat from Snap (SNAP) driving growth in many of the social platform company stock prices. Utilities (XLU) continues to be a safe bet for investors as a sector that is consistently performing well over the past few weeks. Financials (XLF) also had a great week as bond yields are increasing which is usually a good sign for performance of banking stocks. Consumer Discretionary (XLY) started the week on top but backed off a bit before coming back with some good gains on Friday. Energy (XLE) had a huge Thursday that put it at the top of the the sectors, but it could not hold the lead, backing off a bit on Friday. It's not often that we find Technology (XLK) at the bottom of the list for weekly sector performance. Keep an eye on it as many technology companies will have earnings in the next two weeks.
SP:SPX
by drewby4321
Nasdaq Market Update for 10/20Trend lines drawn from 9/3 (33d), 9/24 bottom (19d), 10/12 pivot day (7d), 10/14 (5d), and today 10/20 (1 day). Tuesday, October 20, 2020 I know why you want to hate me Facts: 0.33% higher, Volume higher, Closing range: 28%, Red Body: 9% Good: Stayed above yesterday’s low and holding above 21d EMA Bad: Very choppy day with selling into close Highs/Lows: Lower high, Higher low (Inside day) Candle: Inside day, 9% red body with 28% closing range. Advance/Decline: 1.18, slightly more advancing than declining Sectors: Utilities (XLE) finished the day on top. Consumer Discretionary (XLY) and Finance (XLF) led at mid-day but fell off. Consumer Staples (XLP) was the worst performing. Expectation: Sideways or Lower It was a choppy day with many moves back and forth. After being up 1.34% at one point in the day, the Nasdaq dropped in afternoon selling, ending the day with a 0.33% gain. The candle has a thin negative body of 9% and a lower closing range of 28%. The inside day (recognized by the price range being within the previous days range) often marks a continuation of the current trend. There were slightly more advancing stocks than declining stocks. Although volume was higher, it is still lower than recent average volume. The index is still testing October support area and the 21d EMA. Breaking the 21d EMA would be a negative signal. The S&P500 gained +0.47%, with Utilities (XLE) ending the day as the leading sector. Consumer Discretionary (XLY) and Financials (XLF) both led at mid-day but lost those gains in the late afternoon. Consumer Staples (XLP) was the worst performing sector today and the only sector with a loss. The mega-caps all saw gains with Apple (AAPL +1.32%) and Google (GOOG +1.39%) outperforming the indexes. Microsoft (MSFT +0.20%) and Amazon (AMZN +0.31%) turned in smaller gains. Growth stock Tesla (TSLA -2.06%) continues to lose ground heading in Wednesday earnings. Logitech (LOGI +15.76%) had a huge gap up after bearing expectations. Some 2020 favorites such as Zoom (ZM -5.51%), Datadog (DDOG -2.75%), and Pinterest (PINS -1.09%) had losing days. Snap (SNAP -0.74%) is up over 22% after hours after also smashing expectations. As for expectations, a lot depends on news coming from ongoing stimulus discussions. A positive sign of an agreement could have the index bounce of this support area and move up +3.65% to rejoin the trend line drawn from the 9/23 bottom. Another potential outcome is that stimulus talks continue and investors remain optimistic which could result in a +1.02% gain, continuing today’s trend line and rejoining the trend from 9/3. The index is trading in the lower half of all these regression trends. However, there seems to be good support at the 21d EMA and so a downward move looks like it would be limited to a -0.22% loss. That would continue along the trend drawn from the pivot on 10/12. If investor sentiment were to worsen, the index could break through the 21d EMA and then hopefully find support at the 50d MA. I'm keeping the June Support line in view, but its 15% below the Tuesday close and there are 4 key support levels that the index would have to break thru. If we have a significant downside that takes the index below 11,300, then I'll add that possibility back to the chart.
NASDAQ:IXIC
by drewby4321
Sector Winners and Losers week ending 10/16It was a back and forth week with Technology (XLK), Utilities (XLU) and Energy (XLE) all fighting for the top spot. Even Industrials (XLI) made a late effort to end the week at the top. In the end, the safe haven of Utilities (XLU) won the week as investors fled more volatile stocks for something that everyone needs going into the winter. Heat! Communication Services (XLC) and Technology (XLK) drove the early week gains in the market. But they could not hold on to the lead, nor could they keep the market in it's upward rally. Both faded throughout the week as did the major indexes. Energy (XLE) had a couple good runs through out the week as crude oil prices rose on news that the national supply was lower than expected. Low supply means demand is returning and higher prices. That's good news for the big energy companies, but ultimately investors took profits at the end of the week. Consumer Discretionary (XLY) was doing well early in the week thanks to Apple's (AAPL) breakout on rumors of a new phone. "Buy the rumor, sell the news" is exactly what happened as Apple and XLY pulled back after the new phone was confirmed. Nothing like the soft comforting warmth of having your money in Utilities (XLU). Maybe I should try that.
SP:SPX
by drewby4321
Study of Sector Rotation During 2020 Market CrashFor Growth Investors, there were a few shocking days over the past months where the indexes went up but our portfolios went sideways or down. There's no worse feeling than having the market go up and have your portfolio go down. The cause was sector rotations as investors moved into "discounted" stocks that were hit the worst during the market crash of 2020 and hopes were they would recover sharply. This chart is a visual history of the last several months and confirmation of the rotations occurrences. I'm using Select Sector SPDR ETFs: XLK, XLY, XLV, XLC, XLB, XLP, XLRE, XLU, XLI, XLF, XLE. The base chart is a composite price index of all the ETFs listed. The other lines are % change comparison of each ETF starting just before the market made all-time highs and then turning downward. Please post in the comments if you see other insights in the chart. Here's hoping for a continued recovery and a safer world over the rest of 2020.
Editors' picks
AMEX:XLC
by drewby4321
58
Ahrvo Weekly Sector Rankings: 4/27/2020With another week of earnings in the books, investors are starting to get a better idea of the impact that coronavirus is having on S&P 500 companies. It’s not pretty. For Q1 2020, the S&P 500’s earnings decline accelerated from -14.5% last week to -15.8% (worst since Q3 2009). The fall in earnings can be attributed to cyclical sectors- materials (down 25%), industrials (down 31%), financials (down 42%), consumer discretionary (down 42%), and energy (down 67%) sectors. Defensive sectors- utilities (up 4%), consumer staples (up 4%), health care (up 3%), and technology (up 1%) have faired much better. Of the 122 companies that have reported results, 60% reported both positive earnings and revenue surprises. However, it’s worth mentioning that analyst expectations were down 10% on average in March, so companies beating expectations are jumping over a lower hurdle. Over the last week, the S&P 500 continued to climb higher, up ~4%. Media outlets have attributed the positive price movement to a possible coronavirus vaccine. The upward movement in price, coupled with decreasing earnings has caused the price-to-earnings ratio (valuation) of the S&P to become expensive relative to historical averages. Making buying stocks expensive at a time when economic uncertainty is at an all-time high. The forward P/E on the S&P 500 is 19.1x, higher than the 5 and 10 year average of 16.7x and 15x, and up from 14x in early March. As an example of the uncertainty facing company executives (and as a result, the investors/traders), only 50 of the 122 companies that have reported results mentioned EPS guidance for Q2 in their earnings presentations. Of the 50 companies, 30 mentioned they were no longer certain of their EPS guidance (forecast) for the year, with all 30 citing coronavirus as the primary reason. Out of the other 20 companies that provided guidance, 10 issued EPS guidance that was lower than previous expectations. Over the last week, all but one (utilities) sector experienced an increase in price. In typical “risk-on” fashion, all cyclical sectors outperformed. Energy (ticker: XLE) led the way, up 9.6%. While financials (ticker: XLF), materials (ticker: XLB), industrials (ticker: XLI), and consumer discretionary (ticker: XLY) returned 6.7%, 6.5%, 4.9%, and 5.1%, respectively. Technology (ticker: XLK) was the only “defensive” sector to outperform, up 5.2%. Utilities (ticker: XLU), healthcare (ticker: XLV), consumer staples (ticker: XLP) returned -.28%,.77%, and .52% respectively. It’s worth noting that sector performance (rotation) was a complete reversal from last week when defensive sectors outperformed cyclicals and the market. As the S&P 500 climbs toward the 3,000 price level, investors need to ask themselves whether the house being built is sitting on solid foundation. The market is trading on the positive news when the reality on the ground is much different- 30 million Americans unemployed over the last 6 weeks. The infusion of liquidity by the Federal Reserve and the U.S. government has helped to prop up asset prices. However, ask yourself this question. Why are investors buying into the market at a time when stocks are expensive, economic uncertainty is high, and company executives aren’t even able to articulate what they expect their companies to do over the next 3 to 6 months? It is a recipe for disaster. Although I remain net-long, I don’t plan on adding new capital to stocks until the market pulls back and valuations become reasonable (14x-16x earnings). As the high from stimulus begins to fade, that opportunity will present. -Appo Agbamu, CFA Ahrvo Score (Overall Score) 1)Technology (⬆️1 spot) 2)Utilities (⬇️1 spot) 3)Industrials (⬆️1 spot) 4)Consumer Staples (⬇️1 spot) 5)Consumer Discretionary (no change) 6)Financials (no change) 7)Basic Materials (no change) 8)Health Care (no change) 9)Energy (no change) Momentum Score 1)Healthcare (⬆️1 spot) 2)Technology (⬇️1 spot) 3)Basic Materials (⬆️2 spots) 4)Consumer Staples (no change) 5)Utilities (⬇️4 spots) 6)Industrials (no change) 7)Consumer Discretionary (no change) 8)Financials (no change) 9)Energy (no change) Growth Score 1)Financials (no change) 2)Industrials (no change) 3)Technology (no change) 4)Consumer Discretionary (no change) 5)Consumer Staples (no change) 6)Utilities (no change) 7)Health Care (no change) 8)Basic Materials (no change) 9)Energy (no change) Quality Score 1)Consumer Discretionary (no change) 2)Industrials (⬆️1 spot) 3)Consumer Staples (⬇️1 spot) 4)Technology (no change) 5)Utilities (no change) 6)Energy (⬆️1 spot) 7)Financials (⬇️1 spot) 8)Basic Materials (no change) 9)Health Care (no change) Value Score 1)Industrials (no change) 2)Consumer Discretionary (no change) 3)Financials (no change) 4)Utilities (no change) 5)Energy (no change) 6)Consumer Staples (no change) 7)Basic Materials (no change) 8)Technology (no change) 9)Health Care (no change) This material is for informational purposes only. Under no circumstances should any information or materials presented be used or construed as an offer to sell, or a solicitation of an offer to buy, any securities, financial instruments, investments, or other services. Any investment made is at your sole discretion. There are many factors that you must consider when making an investment decision, including, but not limited to, product features, risks, whether or not an investment meets your investment objectives, risk tolerance, and other personalized factors. Investing in securities involves risks, and there is always the potential of losing your entire investment.
AMEX:SPYShort
by AhrvoStockApp
Ahrvo Weekly Sector Rankings: 4/20/2020Earnings season is well underway. For Q1 2020, 45 S&P 500 companies have reported earnings. Of the companies that have reported, 66% have reported a positive EPS surprise (beat earnings expectations) and 70% of S&P 500 companies have reported a positive revenue surprise (beat revenue expectations). The earnings decline for Q1 2020 thus far has clocked in at -14.5%, which would make it the largest earnings decline for the S&P 500 since Q3 2009. Revenue growth has averaged .6%. All sectors have a slower growth rate than they did on March 31st. The stock market’s performance continues to deviate from economic fundamentals/ Eventually, that will need to be reconciled. Over the next week, 96 companies are expected to report, providing additional clarity on the state of corporate America. According to Factset, the net income margin (a measure of profitability) for S&P 500 companies has fallen to 9.4% based on reported Q1 results. This is below the 5-year average of 10.6%. The fall in profitability did not start this quarter. S&P 500 companies’ net income margins (profitability) have declined for the last four quarters. The largest decrease in profitability has been experienced by cyclical sectors- Financials (down 60%), Energy (down 250%), Consumer Discretionary (down 155%), Industrials (down 136%), and Materials (down 21%). Defensive sectors profitability has held up much better- Consumer Staples (down 3%), Healthcare (down 5%), Technology (down 3%), and Utilities (up 1%). Overall, analysts expect net margins to decrease in the 2nd quarter and make a rebound in the 3rd and 4th quarter of 2020. For the first time in two weeks, all S&P 500 companies did not have a positive price performance. By and large, defensive sectors outperform cyclical sectors. Signaling that investors are becoming more cautious as the stock market continues to rise. Defensive sectors- healthcare (ticker: XLV), consumer staples (ticker: XLP), Utilities (ticker: XLU), and technology (ticker: XLK) returned 6.5% (outperform), 2.9% (outperform), -1.1% (underperform), and 2.9% (outperform). Cyclical sectors- consumer discretionary(ticker: XLY), energy (ticker: XLE), financial (ticker: XLF), materials (ticker: XLB), and industrial (ticker: XLI) returned 4.1% (outperform), -2.7% (underperform), -2.4% (underperform), -2.4%, and .2%, respectively. The S&P 500 (ticker: SPY) was up 2.3%. Over the last month, the S&P 500 is up ~17% while the U.S. economy has lost 22 million jobs- more than erasing the jobs created over the last decade’s economic expansion. The decrease in earnings, coupled with the rise in stock prices has led to the S&P 500’s multiple to expand. Making stocks more expensive at a time when economic uncertainty is at an all-time high. The forward 12-month P/E ratio for the S&P 500 is 18.5x. This P/E ratio is above the 5-year average (16.7x) and above the 10-year average (15x). Analysts project that Q2 earnings will decline by -26.6% and a revenue decline of -5.7%. For Q3, analysts are projecting an earnings decline of -13.3% and a revenue decline of -1.6%. Things are expected to improve in the last quarter of the year, with earnings expected to fall -4.8% and revenue expected to increase to 1.1%. However, I would not be surprised in Q4 estimates get revised downwards as analysts tend to overestimate future expectations. Going forward, I expect the S&P 500’s P/E ratio to contract to at least its 5-year average and for stock prices to fall. Defensive sectors should continue to outperform cyclicals, as fundamentals deteriorate. -Appo Agbamu, CFA Ahrvo Score (Overall Score) 1)Utilities (no change) 2)Technology (no change) 3)Consumer Staples (no change) 4)Industrials (no change) 5)Consumer Discretionary (⬆️1 spot) 6)Financials (⬇️1 spot) 7)Basic Materials (no change) 8)Health Care (no change) 9)Energy (no change) Momentum Score 1)Utilities (no change) 2)Healthcare (no change) 3)Technology (⬆️1 spot) 4)Consumer Staples (⬇️1 spot) 5)Basic Materials (no change) 6)Industrials (no change) 7)Consumer Discretionary (⬆️1 spot) 8)Financials (⬇️1 spot) 9)Energy (no change) Growth Score 1)Financials (no change) 2)Industrials (no change) 3)Technology (no change) 4)Consumer Discretionary (no change) 5)Consumer Staples (no change) 6)Utilities (no change) 7)Health Care (no change) 8)Basic Materials (no change) 9)Energy (no change) Quality Score 1)Consumer Discretionary (no change) 2)Industrials (⬆️1 spot) 3)Consumer Staples (⬇️1 spot) 4)Technology (no change) 5)Utilities (no change) 6)Financials (no change) 7)Energy (no change) 8)Basic Materials (no change) 9)Health Care (no change) Value Score 1)Industrials (no change) 2)Consumer Discretionary (no change) 3)Financials (no change) 4)Utilities (no change) 5)Energy (no change) 6)Consumer Staples (no change) 7)Basic Materials (⬆️1 spot) 8)Technology (⬇️1 spot) 9)Health Care (no change) This material is for informational purposes only. Under no circumstances should any information or materials presented be used or construed as an offer to sell, or a solicitation of an offer to buy, any securities, financial instruments, investments or other services. Any investment made is at your sole discretion. There are many factors that you must consider when making an investment decision, including, but not limited to, product features, risks, whether or not an investment meets your investment objectives, risk tolerance, and other personalized factors. Investing in securities involves risks, and there is always the potential of losing your entire investment.
AMEX:SPY
by AhrvoStockApp
1
S&P 500 Sectoral OverviewWe have already mentioned that the S & P500 major rally started 57 weeks ago : We are now facing a tough sale. So which sectors were traded on the index or discounted in this process? You can view them from the terminal. I would like to write the sectors that remain inexpensive so that when we return to the favorable atmosphere, keep in our mind: OSX : PHLX Oil Service Sector Index XNG : NYSE ARCA Natural Gas SPSIOP : S&P Oil and Gas NQNACE : Nasdaq Yewno North America Cannabis Economy Index CONCLUSION : We see a discount from the commodity in general and the oil and gas sector in particular. But in order for us to evaluate them, there should be a time when we expect both an increase in the related commodities and a positive atmosphere in the S&P 500, then we can turn to these sectors and make profitable investments. Regards.
OANDA:SPX500USD
by Noldo