Markets were rather subdued this week but the S&P did manage to set a new closing high. While gains in the major averages were modest, we saw some strong performance from several of our holdings. Lets take a look!
AAPL
AAPL had a good week, breaking out decisively from its resistance area. Two weeks ago I said that on the shorter term timeframe more upside was expected and since that call, AAPL is up nearly 8%. The most impressive thing about its rally is that it occurred at a very big sticking point for price recently. I love to see the short and long term timeframes line up; here the long term signaled our initial entry, the short term told us that we would likely see the resistance broken and now again the longer term signal was generated from the breakout. Awesome stuff from a price perspective!
AAPL will announce earnings Monday after the close, so be prepared for a volatile day. But as of now price suggests the trend should continue.
CMI
While CMI didn't do much this week (in fact it lagged a bit), you can see how price has behaved since making new all-time highs. Since the breakout, price has consolidated the big move very orderly and is currently bouncing back signifying a continuation. As long as price can hold above this breakout zone for a little longer, we can move our stops to just below the prior high and new low at $128.
F
Ford announced earnings this past week and after an initial pop on the news, it traded lower to flat into the end of the week. This is not the best action off of news of another strong quarter. Usually when good news is not bought strongly, it says that price has reached an intermediate term top (think HD as a recent example). We are at a sticking point here (and really have been since that Double Bottom target acquisition back in June). Price is currently in the resistance band for the massive Head/Shoulder Bottom pattern and we will need to see a stronger push to the upside to believe that a significant rally can occur from here.
Stay with Ford, but stay lightly positioned until either price corrects back to the lower supports or breaks out above $19. In the markets there are times to press trades and times to put on the brakes; after a nearly 100% move in F since mid 2012, I feel the time to put on the brakes is here.
PBW
PBW got sold this week after a 2 month straight up rally. I have stated that I would like to see this move sideways and consolidate for several weeks before heading higher, as that would set up a nice new support base. I am VERY pleased with this above $6.40, but wouldn't be stunned if it traded back to the 20 WMA at some point in the next month. The $6.00 level will be an important one to watch.
DDD
DDD continues to defy gravity and other than a violent shakeout move 3 weeks ago, this has maintained its place along the upper Bollinger Band; when price stays so close to the upper band it shows great strength. While I have taken some short term gains off since buying that dip a few weeks ago, this still seems poised to continue higher. The long term cup/handle pattern is seeing follow though now and looks to be a valid pattern (meaning the market is acknowledging the bullish formation).
This will continue to see violent moves up and down. My plan with this is to put money to work on the big dips into support and trim off as it moves back into the upper range. I do maintain a long term positioning at all times as well, but this is a fantastic stock to trade a bit, it you are inclined to do so.
PPG
PPG just keeps rocking higher. After reporting a great quarter this past week the stock has ripped through the upper channel resistance. This usually means one of two things: either it is over-extended and will correct back to the longer term trend OR it is about to undergo a parabolic type move that will then go on to be an intermediate to long-term top.
Those are my "speculations" based on the theoretical idea of trend and channel resistance, but as always we will stick with this long term winner until we have proof that the move is in fact over...As of right now it is simply in "beast mode" and should be held as a fantastic anchor position in a portfolio.
HAIN
HAIN has been another big winner both this year and the past 3 weeks. This (like DDD) I have also reduced into the strength we saw this week in my shorter term accounts. Again if you were in there buying that retest of the breakout 3 weeks ago, we have seen a 15% move off those lows, and some of those quick gains can be taken here. Especially considering that Earnings will be announced on Nov 9th, I would be looking to trim shorter term trades from now into that Nov 9 date. Long-term this still looks great and I am holding for longer term accounts.
The "Close Watch" Sectors from last week:
XLI (Daily view)
Well it didn't take long for the Industrials to breakout to new highs! Last week we were watching to see how the short term under performance was handled by the market at all-time highs. Our RS trend saw a great bounce off support, signaling that the strength is still in place and that XLI was just taking a breather after a good run up.
This is why we map strength and trends, they let us know the intentions of prices before, during and after an event or test. The mapping provides us with an edge over random investing, and is the reason we will improve our returns over time.
XLB (Daily view)
I could basically say ditto for the Materials sector, also breaking to new highs. Now that Materials are showing solid leadership, you should be exposing yourself to the space in some way if you have not done already. I'm seeing a ton of value and great setups in some of the mining stocks...My top mining picks here are FCX and NUE (I am currently long both names and have been for about a month).
They are showing great relative strength and price breakouts, have been beaten up over the past few years and are now seeing money rotate back into them.
That's all for this week. With the markets at new highs after the recent big bounce, it would be healthy for some consolidation before pushing too much higher. I want to see signs of a stable trend and new high, that will provide longevity to the rally. A big spike here could be dangerous to the market longer term, so I will also be on the lookout for any "blow off" type move.
As of now its still "all systems go". We have new-all time highs, solid offensive sector rotation, and plenty of Fed stimulus into year end. Keep riding the wave!
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