Are Energy and Financial stocks about to lead the market?
Cyclical groups are catching all the right tailwinds in this environment.
Crude Oil and Yields are pressing to new 52-week highs as investors continue to favor more economically-sensitive stocks and commodities in general. This is a bullish development and supports higher prices for some of the most beaten-down risk assets... even Financials and Energy.
When you really dive in and see what's going on, it becomes quite obvious that this will end in disaster for many investors.
Do you know why?
Because that's what always happens.
So what?
Why is that our problem?
What does that have to do with investing and helping my family?
If you take maybe just 30 seconds to study history, you’ll find that most uptrends were not bubbles. They were just uptrends.
There were things that happened this month and even last year that have never happened in the market before. There were even some events that only occurred a few times in history.
So what?
Every month and every year we see the market do things that it's never done before, or maybe has done very rarely.
If you really want to get into it, we see something happen every single day that rarely happens, if at all.
So what?
We can make a big to-do about it, if that's your modus operandi. Remember it's a lot of people's job to sensationalize everything. Way more people than you think. And in many cases, the ones with the loudest mics.
Big day everyone! We are debuting a new feature for Premium Members of All Star Charts India! There are a lot of exciting things lined up, but it's time to reveal a little something now.
Introducing the new kid on the block- The Outperformers!
The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.
The market as a whole does not move together. Regardless of the market direction, there are always certain stocks and sectors that act as leaders and laggards. As the name suggests, the Leaders are the first to respond to a particular trend, whereas the Laggards join in later.
There is a big advantage in identifying these leaders in any given market environment. These are the names that generate greater returns compared to market indices as well as other stocks.
For example, in a market environment where mid-caps are outperforming the large-caps, it would make sense to be invested in mid-caps rather than large-caps.
You'd have to be a part of the market for quite some time to be able to claim that you witnessed a bull run in the PSU Banks sector. This sector is notorious for perpetual underperformance regardless of the market sentiment.
Well, maybe that's changing. Over the past two weeks, these hibernating stocks decided to wake up and join the party. Looks like they finally received the invite for the ongoing rally!
A move above 1,900 in the PSU Banks Index is crucial and here's why. This level has played the role of strong support for close to seven years. With the breach of this level in early 2020, the principle of polarity would mean that 1,900 would turn into stubborn resistance. The fact that PSU Banks has broken out of this resistance rather quickly, hints at the strength that's building in this index.
We are bullish above 1,900, for targets near 2,645 & 3,445.
Here we go with another round of our Top-Down Take post. At All Star Charts we like to keep things simple and look at the bigger picture. We let the charts speak to us and then decide what to do. Always remember, the Trend is our Friend.
Today we’re taking a look at the sector that seems to be rallying with a vengeance! The PSU Banks are out and about, finally enjoying their moment in the sun.
At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.
We continue to harp on the risk-on themes that support our bullish macro thesis.
If Bitcoin's run to $50,000 or the latest YOLO stocks aren't too distracting right now, you might have noticed Crude Oil just registered new 52-week highs for the first time since fall 2018.
Or maybe you're ahead of the curve and caught our post about the Energy Sector experiencing what looks like a bullish initiation thrust just a few weeks ago.
Or perhaps you saw Financials just closed the past week at fresh all-time highs... finally breaking out after almost 15-years of no progress!
On top of all this action, the US 10-Year Yield is also pressing on its highest level in almost a year.
It's clear that more cyclical stocks and economically sensitive Commodities are taking on leadership roles. We're in quite the risk-on environment.
Considering the evidence we just listed, it's finally time to address the elephant in the room...
Nifty Industrial Manufacturing has been performing well and has caught our attention over the past two weeks. We selected Cummins India and Siemens Ltd. in our Trade of the Week before. But it seems like the other constituents are catching up as well.
We thought we could look at actionable ideas in this sector as several stocks are breaking out of big bases.
We created an Equally weighted custom index of the Industrial Manufacturing sector and this line chart reflects exactly what we're seeing in the individual constituents. A breakout in this index is suggesting further upside as an increasing number of stocks participate in the rally going forward.
