Two months ago we highlighted Deutsche Bank because we felt that price action disagreed with prevailing bearish sentiment around the stock, which created an opportunity for us on the long side. Today we're looking at a stock that presents a similar trade for us, with well-defined risk and 30% of potential upside over the intermediate-term.
Last week I wrote about the Canada's Energy markets to introduce our new Canadian Chartbooks (Major Sectors & Indices and TSX 60). In today's post I want to focus on the Banking and REIT sectors, which are showing relative strength and continue to offer opportunity on the long side. Not to mention I've been itching to use this Toy Story pun as a title since JC hired me.
First let's take a look at the TSX Capped REITs Index vs the TSX Capped Composite. It's spent the last 2 years bottoming and is now breaking out above a confluence of resistance. If this ratio is above it, the bias is to the upside with a target at the '15-'16 highs.
In our last India Chartbook Update post we discussed a continuation of the trends we've been seeing for most of 2018, as well as some new developments in the Commodities and Currencies space. Additionally, our mid-cap update discussed our shifting view of that market-cap segment and highlighted the best opportunities in our view. We also did a small-cap update post the following day highlighting our views there. Today we're going to discuss any major changes over the last two weeks at a high level, which will direct you to the Chartbook areas to look for these themes.
This week we added Canadian Stock Market and Sector Indexes and the entire TSX 60 to our chartbook coverage. To kick that off, I want to take a look at the Canadian Energy market and share what we're seeing.
Last month we added the Investors Business Daily 50 List to our chart coverage. This list combined relative strength and strong fundamentals to highlight 50 of the best stocks in the market. Today I updated the Chartbook for members, so I wanted to highlight some of the best names I'm seeing on this list across several sectors of the market.
First, let's start off with a daily chart of the IBD 50 ETF $FFTY. Prices have been in a strong uptrend and look to be continuing higher after a failed breakdown below 35.15 and test of the 200-day moving average (if you're into that sort of thing). Momentum remains in a bullish range, so if prices are above 35.15 our upside objective continues to be 40.75.
Sector rotation. Sector rotation. Sector rotation. I probably sound like a broken record at this point, but today's theme is once again...sector rotation. This time it's Transports being helped back to their January highs by an improving Airline sector. We've spoken about the relative strength in Railroads and Trucking stocks, and acknowledged the relative under-performance in Airlines two months ago, but the data has slowly shifted.
We also pointed out that although Airlines were the worst of the Transport stocks, they were hanging in there on an absolute basis. Sure, there were weak names within the sector like American Airlines, but there were also strong stocks like United Airlines. Today, however, we're seeing the relative performance of the group trying to bottom and the absolute performance of even the weakest names improve.
During our August Members-Only Conference Call we discussed a lot of the big-picture trends from around the world and in India, but we wanted to do a long post discussing what we're seeing in the small-cap space. In this post I'll cover what we're seeing in the index itself, as well as get into some of its most actionable components.
Over the weekend as I was doing my run through the entire S&P 500, I noticed some emerging strength in areas that aren't quite as sexy as Medical Devices or Railroads (kidding). Instead, what I found was a number of potential long opportunities in the Real Estate, Utilities, and Telecom sectors. While the long-term relative performance of these sectors is nothing to write home about, as I explained in my Agribusiness post, I still think it's important to point out strength on an absolute basis because it contributes to the weight of the evidence and provides value to those who may have a portfolio approach that includes those areas of the market.
With that said, let's take a quick look at what I'm seeing.
During our August Members-Only Conference Call we discussed a lot of the big-picture trends from around the world and in India, but we wanted to do a long post discussing what we're seeing in the mid-cap space. In this post I'll cover what we're seeing in the index itself, as well as get into some of its most actionable components.
On May 1st we spoke about seasonality and why the traditional "Sell In May and Go Away talk is a great headline, but not a great investment strategy this year. While most think that seasonality data is useful to position ahead of what are typically weak or strong periods, we find that the real signal occurs when the market does not adhere to its historical patterns. Now that we're a bit more than half way through the seasonally weak May-October period, we thought it'd be helpful to look at the market's performance thus far and see what it could possibly mean for the rest of the year.
The Retail Sector ETF $XRT just made new all-time daily closing highs. I was going to write an extensive piece on how we got here and the lessons we can take away about knowing what we own and exercising professional skepticism when we hear gross generalizations like "retail is dying", but I don't think I even need to make it that complicated.
Friday we wrote about the US Dollar breaking out to 1-year highs and why it's one of the most important charts we're watching from an intermarket perspective. With that said, we always look at both sides of the story, and while the US Dollar breakout certainly adds to the bear case for Precious Metals, I want to use this post to explore all of the current bullish and bearish characteristics of the space.
