This evening, I present to you the first of what I hope will become a regular series of posts on this here page.
In the day-to-day of the market, I often devote the bulk of my focus to daily charts. I lose perspective on where price stands on a longer time frame. The weekend provides a great opportunity for me (or anyone, for that matter) to take a step back and observe the weeklies.
To help distill information, I employ an industry scoring algorithm to guide me toward groups of stocks that are performing best on a relative basis (compared to the S&P 500). From there I run a relative strength measure on stocks from those industries that are greater than $5/share and trade an average daily volume over 1 million shares. Once I obtain that list, I start looking at charts.
The information I present here is the list of stocks that I am interested in watching. You may think they look like shit, maybe not…I suppose we’ll just have to wait and see.
As an aside, if/when there is a rally, it will be interesting to watch and see if these industries start to underperform in the short term. If that does happen, I will be of the opinion that we are looking at a short-squeeze moreso than something tradable on a longer time-frame.
In essence, if you choose to deploy cash reserves, these look like ‘less bad’ places for your money in the intermediate term.
With that said, there are a number of stocks that are poised near points of resistance. A rally could be the kick-in-the-ass they need to get through those areas.
Click on the title for a link to some charts/info.
The industry has held up quite well over the past few weeks with a high percentage of stocks hovering right around previously established levels of resistance. Being REIT’s, many of these boast a relatively high yield as well. Pick your favorite among the bunch, they are all looking decent right about now.
I have found that stocks in this industry are the most difficult of all to interpret. On many occasions I see a pattern forming that I like to trade. I will open a position then sit there and watch as price starts to behave erratically. I get nervous when stocks behave in ways that are puzzling to me. When I get nervous, I tend to pull back and walk away. Even on weekly charts there is still a great deal of price variability within a single bar/candle, and that usually makes me cautious if I’m stalking positions.
There are certainly a few rippers in this industry…check out $REGN…not a bad 4.5 months.
The other day I was musing over one of the brilliant CNBC anchors talking to an ‘expert’ about how utilities are a “dog” of the market. In February, yes, utilities would have been one of the least desirable places to have your money. Well guess what, big-hair tan guy, it’s mid-May, and utilities are all the rage on the stock exchange. As I mentioned the other day, one must keep in mind: with industries like the three of these outperforming…that is not typically the sign of a strong market.
The old men prolong their romp here as they continue to run the same damn play all goddamn day and the hot shot kids are helpless to stop them. There are often times when winning is more about fundamentals than flash and grandeur.
$HNZ is paying 3.5%, $UL 4.66%…something tells me that those companies are not likely to announce a surprise(?!) 2 billion dollar loss any time soon.
Happy Mothers Day to everyone.
-EM
