Last week Wall Street had a rally, led by the tech heavy Nasdaq Composite. This came as a sign to many investors that the market is beginning to gain back momentum. But which market sectors do we see continuing to lead the way to a healthier market this year?
The FANG stocks of Apple (AAPL), Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Google’s parent company Alphabet (GOOGL) have all been performing well this year. With Netflix doubling in value alone. Other software stocks such as Salesforce.com (CRM) have also been performing well. Payment stocks also have been a strong force in the market with retail names like Lululemon (LULU) and TJX (TJX) also big market winners.
Energy Stocks such as Chevron (CVX) to Marathon Oil (MRO) are also performing strongly but remain subjected to the up and down prices of crude oil. Biotechs are also attempting to make a comeback with big names like Biogen (BIIB) experiencing a major spike on Friday due to positive drug trials occurring with an Alzheimer’s medication they are producing.
In the meantime, the Blue Chips are far away from their usual highs, which is concerning when referring to a stock market rally. There 2018 finanacials are at all time yearly lows, with JP Morgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) all starting off earnings season this Friday.
Dow Futures today rose 0.5% vs fair value, S&P 500 futures also went up 0.5% while Nasdaq 100 futures also were 0.5% over fair value. It’s important to remember the Dow Jones futures and other overnight action does not always translate into actual trading in the next regular session. (Source: InvestorsBusinessDaily.com, “Market direction improves; These Stocks aim to lead rally”)
The stock market has been under recent pressure following US trade war news and tariff threats occurring over last several weeks, and kicking off in China last week with both countries levying $34 billion in tariffs against each-other. Trump is now threatening tariffs on all Chinese imports following Beijing’s swift retaliation last Friday. However, for the moment, Wall St feels the Trump Trade impact has been priced into the affected stocks.
If you focus on the tech heavy Nasdaq Composites performance over the last several months, it seems to have broke out June 1st, rallied for a few weeks and then erased the gains, before having another rebound last week from its 50 day moving average.
Meanwhile, the Dow Jones and S&P 500 have been consolidating since the end of January with the S&P in doing slighlty bettter now then it had been previously this year.
Even top stocks tend to follow suit of the broader market as a whole and sector rotations in and out of China Internets, software stocks and energy stocks have managed to leave many individual stock charts looking more volatile.
The two big winners of 2018 have been Netflix and Apple. Following a huge scandal in the Spring Facebook’s stock is still at record highs and slightly extended from a buy point. Apple stock is in buy range as well from 179.04 double bottom entry. In the meantime, The Dow Jones component has moved back its 50 day line and could be working on new consolidation. Alphabet is below its buy point after a low volume breakout last month and getting resistance at its old high.
Software Stocks account for four of the top ten groups in the 197 industries that IBD tracks. However, buying and holding software stocks remains a challenge. While retail stocks such as Canada Goose and Lululemon are performing exceptionally well in 2018. Also TJX, Five Below and Dollar General are all names to keep your eye on right now.
One thing that has remained a strong point in the market has been payment stocks like Mastercard and Visa who have both been consolidating near record highs the last few weeks. While Square and Paypal are also close to record highs.
Finally, Biogen Stocks to watch right now are Vertex Pharmaceuticals, as they are closing in on a buy point, while continuing to improve even during downtrends over the last several months. A few noteworthy Biotechs ETF’s are iShares Nasdaq Biotech and triple levered Direxion Daily S&P Biotech Bull are also both coming to possible buy points with RS lines that have done very well over the past year.