Hello everyone,
Currently, the following areas have the cleanest charts and highest relative strength:
Defensive sectors (utilities, select health care, tobacco)
Aerospace & Defense
Metals (Gold, copper)
Marine shipping
Foreign markets
In an equity market with a growing amount of worry signs, it’s no surprise to see defensive sectors on this list. I’ll dedicate today’s blog post to them, as most other areas have already been covered in recent reports.
Utilities
UTES Weekly. This utilities ETF is concentrated in NEE, VST, and CEG. It made a strong breakout this week:
Utilities not only act as a defensive play but double as a growth play, given the enormous capex spending on data centers and the growing need for energy. In fact, VST outperformed NVDA over the past year!
In Canada, CIF made a breakout to new highs this week. This ETF contains a 50% allocation to utilities, with the remainder in industrials and energy. While the broader market has been choppy in the past several years, CIF produced one of the steadiest uptrends out there:
EMLP is another ETF that is a hybrid of utilities and energy. The monthly chart shows this ETF steadily climbing after a big breakout in Dec.
Health care
XLV Weekly. In the last several weeks, the oldest and largest (by AUM) healthcare ETF has retested and held a clean, multi-year support. It could still be many more weeks before this (and the broader market) gets going to the upside, but this is undoubtedly a sign of promise.
Within XLV, there has been a lot of leadership dispersion. Weight-loss drug makers Eli Lilly (LLY) and Novo Nordisk (NVO) are each up more than 40% in the past year, while Bristol-Meyers (BMY) and Pfizer (PFE) are each down more than 25% in the same period.
But now, the laggard vaccine stocks look very interesting. PFE is showing some strength at 8-year support: