Key points:
Key points:
Key points:
USD break out to 52-week highs.
Pressure on EFA and EEM funds (local holdings in ETF negatively affected by USD strength). Currency-hedged ETF a way to avoid some losses (Developed: HEFA; Emerging: HEEM).
Turkey is the latest EM market to deal with major currency losses this year (joining Brazil, Argentina, and South Africa).
Key points:
Key points:
Across the full universe of stocks (>1B market cap), there is a big weekly divergence. Below are the weekly changes by sector for the ~900 stocks that have reported this Q2. For positive sectors, we list the largest % winner and for negative sectors, the largest decliner.
U.S.:
The Energy sector is slightly lagging the S&P 500 over trailing six-months, after decelerating momentum over eight weeks.
However, the chart is fairly constructive and some short-term outperformance could push it back into long-term leadership. Also, the sector is becoming less volatile than oil (tighter trading range since mid-May), which we see as a positive.
Oil is volatile mostly because of supply disruptions in OPEC countries, Libya, Nigeria, and Venezuela. Also concerns over potential loss of supply from Iran because of U.S. sanctions. Saudi Arabia and Russia agreed to increase output by 1 MMbpd in response.
U.S. production was at 11 MMbpd in July, another record. Permian over half of y/y gains.
E&P industry group ( G1310 ) the best ranked (#21) as it has been for a couple of months.
FANG top pick. CLR and WRD under pressure.
Watch list names include PE, EGN, WPX, and EOG.
Drillers and many field service names are especially weak. Weak guidance from HAL.
EMEA:
Schoeller-Bleckmann ( SCBl.AT; SBO:AV ), only Focus List pick, is in consolidation.
Royal Dutch Shell ( RDSA.NL; RDSA:NA ) and Lukoil ( LKO.RU; LKOH.:RM ) two mega-cap integrated names to own for large-cap PM.
APAC:
China clean energy names remain strong. The government has a five-year 2016-2020 plan to increase the natural gas mix of total energy consumption to 10% from mid-single digits.
Coal-to-Natural Gas conversion for both residential and commercial/industrial markets a multi-year theme which benefits China Gas Holdings ( IWAI.HK; 384:HK ) – 7% from pivot – and ENN Energy ( XINA.HK; 2688:HK ) – extended.
Also, China Everbright Greentech ( CEBL.HK; 1257:HK ), which is government controlled, has 15 biomass projects in operation and 30 more in the works. The stock is at aggressive entry back above the 50-DMA.
Key points:
Commodity Research Bureau Index is below 200-DMA for the first time in 10 months. Interestingly, the breakdown in the index began just before the June 1 tariffs on U.S. allies were instituted.
While correlation between commodities and stocks broke down in 2013 (first chart), it has returned over the past year (second chart). This could be a warning sign for markets..
Commodities holding up better include steel and crude, while zinc, soybeans, nickel, lead, copper, gold/silver, aluminum. Others are all weak.
Longs from stronger groups include Diamondback Energy ( FANG ), Energen ( EGN ), Bluescope Steel ( BSL.AU; BSL AU ), Novolipetsk Steel ( NFM.RU; NLMK RM ).
Shorts from weaker groups include Alcoa ( AA ), Freeport McMoRan ( CX ), First Majestic Silver (
), Anglo American ( AAL.GB; AAL LN ), Newcrest Mining ( NCM.AU; NCM AU ), Barrick Gold ( ABX ), Lundin Mining ( LUN.CA ), and MMC Norilsk Nickel ( GMK.RU; GMKN RM ).
Key points
The stock gained 20% in just three days from its initial pivot above $18.08 at the end of May. This triggered a rule developed by William O’Neil that the stock should then be held for at least eight weeks (or sold on a break below the pivot).
The rule has served well thus far. After testing 50-DMA support in June, the stock is breaking out from a six-week flat base, turning actionable again. We recommend adding to shares here. Support is first at the highs of the prior base ($21.70) and then at the rising 21-DMA ($20.30).
Technical ratings: RS line is at a new high, RS Rating 94, A/D Rating B-.
Fundamental ratings: EPS Rank 98, SMR Rating A, Composite Rating 97.
Key points from this week’s commentary:
The U.S. is the second best market ( NDQC and Russell 200/S&P 600 ) globally year-to-date, behind just Saudi Arabia.
Despite defensive rotation, growth names in Health Care, Tech, and payments within Financials working extremely well. Top picks include Activision ( ATVI ), Paypal ( PYPL ), and Vertex ( VRTX ).
Global conditions improve further with Japan, China, Brazil, Mexico, Philippines/Indonesia all upgraded to Confirmed Uptrend over two weeks.
In the four APAC markets that were upgraded, a few top picks include Kose ( OSEC.JP; 4922 JP ), Pigeon ( PIGC.JP; 7956 JP ), Asahi Intecc ( AS@H.JP; 7747 JP ), and Shanghai International Airport ( HIA.CN; 6000009 CH ).
Key points from this week’s commentary:
Brazil is more than 6% off lows in two weeks and Mexico is back above its 40-WMA for the first time in five months after posting a follow-through day on Thursday.
Our top pick is sole Focus List name Banco del Baijo (BJI.MX; BBAJIOO MM).
Most names in Brazil are still setting up and not yet actionable. However, in Mexico, given the recent follow-through day, several stocks are immediately buyable, in our view. These include Mexichem (CSB.MX; MEXCHEM MM); Alpek (ALP.MX; ALPEKA MM); Bolsa Mexicana de Volares (BMV.MX; BOLSAA MM), and Wal-Mart de Mexico (WAV.MX; WALMEX MM).
