Market review 22.09.11
Hello everyone,
Last week, we looked at how IHE made a breakdown. Well, big pharma has recovered that support and the ball is back in the bulls’ court:
With the rebound in markets this week, here’s how leadership stands:
Solar and uranium are now overtaking leadership from oil & gas. EVX (enviro services), REMX (rare earths), and XBI (biotech) are also standing out. I’ll touch on all these areas today and more.
Bio, Solar, Software
Throughout the bear market in growth stocks, I’ve been covering several growth leaders that held up well and were forming bases within strong uptrends. This includes ARGX, PANW, DGII, and ENPH. These names continue to act well, and some made for very profitable trades.
ARGX (biotech) made a breakout this week. I first covered this one back in June (link).
ENPH (solar) is a big winner of mine – it’s up another 14% this week, and over 50% since I began stalking it for a trade (link).
PANW (cybersecurity). Keep an eye on this one for a breakout.
Even the severely beaten-up tech names have been forming nice bases all summer. For example, here’s PYPL.
Industrials & materials
We looked at some attractive areas last week: Uranium (CCJ), waste removal (WM, RSG), and even gold miners (WPM). All were up 3-6% this week.
Another area that has excellent charts is industrial manufacturers & suppliers. Here’s HUBB below. Also see charts for CSL, GWW, GPC, and WMI.
Lithium & rare earth stocks had a big week. Leaders ALB, LTHM, and SQM made new breakouts and finished the week 10%-16% higher.
It’s easy to overlook gold miners as they’ve been nothing but a disappointment. But smart $ is very bullish. It’s not often you see them becoming net long on the precious metals, and in several ones simultaneously:
Oil & the intermarket
Last week, we looked at how energy names had recently hit major resistance and that a few names were breaking down.
There was a continued decline this week. Gasoline futures are now down over 40% from their June peak. A lot more failed breakouts in energy stocks:
If the strength in oil (inflation pressures) was what resulted in weak stocks & bonds, then perhaps the recent weakness in oil is good for stocks, bonds and even gold (which is more bond-like in nature). Note: Oil peaked in June while stocks bottomed that same month.
Closely related to the above chart is this one showing OXY (inverted) vs. WPM.
Oil and gold have been polar opposites for the past 4 years. And as we saw in last week’s blog, OXY hit 11yr resistance while WPM simultaneously hit 11yr support!
Closing Notes
Several parts of the market have fallen a lot this year and are in downtrends. However, major multi-year support levels were hit in June and again this month.
It remains a tricky tape, but a probable scenario is that markets continue to hold major supports for months before eventually the downtrend resumes.
For example: One of the weakest parts of the market is Bitcoin. It can hold the $20K support and even rally to $30K+ before the downtrend resumes. Of course, I’ll just ride the trends.
I’ll close it here with this 9/11 quote from 20 years ago:
“If we learn nothing else from this tragedy, we learn that life is short and there is no time for hate.”
— Sandy Dahl, wife of Flight 93 pilot Jason Dahl
Important Disclaimer: This blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.