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Sector Performance Review: Shifting Gears To Make The Next Move

 December 11, 2012 01:25 PM
 


(By Rich Bieglmeier) When a car shifts gears, it usually means the driver is about to speed up or slow down. The same can be said for the stock market. When Wall Street shifts its focus from one group of stocks to another, it generally means stocks are about to speed up or slow down.

In most cases, many investors miss the change in direction as it happens under the surface, or they are watching the wrong target. Many tend to watch the leaders that led the previous march higher or lower. For example, Apple (AAPL) has been the stethoscope monitoring the health of the market. When the AAPL is beating strongly, hey, everything is OK. When the smartphone giant is struggling, as it has of late, hey, something must be wrong.

[Related -Can Eric Schmidt Resolve Google Inc's (GOOG) Biggest Challenge After $100 Mln Bonus?]

Not necessarily, it could simply be Newton's Law of what goes up, must come down – or was that Blood, Sweat & Tears?

In this week's sector performance review, iStock sees the market changing gears away from the large-cap growth stocks, such as Google (GOOG) and AAPL, and towards small and mid-cap stocks. Additionally, we see a bunch of new sectors hitting our bullish lists. Meanwhile, this week there is a more normal distribution of outperforming and underperforming candidates.

The last few weeks, then numbers on the bear's side of the scale have been small. Today, nine are underperformance candidates. According to our take on the charts, investors might consider staying away from telecom stocks for a while. It's not that they will sink; rather, the sector's performance could stink relative to most other industries. Telecom is not alone. Below, you check out the full list.

[Related -Another Good Quarter Builds Bull Case for Google]

On the positive side, Chemicals and Industrials dominate our outperformance columns. A little later today, iStock will highlight one of our favorite stocks from the emerging or mature bull lists.

EMERGING BULL: Industries with positive technical analysis traits that are in the early stages, indicating possible above average returns in the near-term:

  • Aerospace
  • Auto Parts (Looks great)
  • Commercial Vehicles
  • Telecom Equipment
  • Electricity Equipment
  • Industrial Engineering
  • Waste Disposal
  • Drug Retail (another that looks better than most)
  • Heavy Construction
  • Transportation
  • Small Cap
  • Mid-Cap Growth
  • Top-Cap
  • Small-Cap Value
  • Mid-Cap Value

MATURE BULL: Industries that have outperformed and their charts suggest the above average returns could continue:

  • Electronic Equipment
  • Specialty Chemicals
  • Industrial Machinery
  • Industrials
  • Tires
  • Low-Cap
  • Mid-Cap
  • Small-Cap Growth

MATURE BEAR: Industries that have underperformed and, based on their current chart patterns, could continue to lag:

  • Computer Hardware
  • Fixed Telecom
  • Non-Ferrous Metals
  • Gas Distribution
  • Large-Cap

EMERGING BEAR: Industries that have fresh negative technical analysis set ups and could have sub-par performance in the weeks ahead:

  • Media
  • Pipelines
  • Apparel Retail
  • Home Construction
  • Telecom    
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