(By Rich Bieglmeier) Although stocks are coming off a bad week, our sector performance review identified more bullish than bearish sectors – interesting. It's no surprise then that stocks are off to a good start this week.
In this morning's stock market opening report, we highlight the fact that a rally typically follows the NASDAQ's initial, trend breach of its 50-day average. In the past year, the typical move runs at least 100 points higher. We can see the index possibly testing 3,050.
A lot of it will depend on earnings. So far, the 3rd quarter hasn't been as bad as advertised. If the trend of better than expected profits continues, than stocks should continue climb. Ah, but there is always a but, it has been our experience that the best report tend to cluster in the first part of earnings season and then moderate lower. The next few weeks could be as good as it is going to get.
If our post-50-day breach rally is in effect, it looks as if value stocks will lead the way. According to our sector review, growth charts show potential underperformance, especially small-cap; value makes no such distinction.
Normally, iStock searches for some theme that sews the bullish sectors together. Nothing ties our findings together this week. Instead, we find unconnected industries scattered across our bullish sectors. Some of our favorites include Media, Healthcare, and Paper.
Investors might consider fishing for stocks in the bull columns if the balloon is about to take equities to the edge of resistance, before falling back to earth. Come back a little later today as we will highlight one of our favorites from the emerging and mature bullish sectors.
EMERGING BULL: Industries with positive technical analysis traits that are in the early stages, indicating possible above average returns in the near-term:
- Basic Resources
- Travel & Leisure
- Containers & Packaging
- Industrial Suppliers
- Non-Life Insurance
MATURE BULL: Industries that have outperformed and their charts suggest the above average returns could continue:
- Business Support
- Mobile Telecom
MATURE BEAR: Industries that have underperformed and, based on their current chart patterns, could continue to lag:
- Electrical Components & Equipment
- Tech Hardware
EMERGING BEAR: Industries that have fresh negative technical analysis set ups and could have sub-par performance in the weeks ahead:
- Computer Hardware
- Fixed Telecom
- Apparel Retail