Comment of the Day

February 12 2013

Commentary by Eoin Treacy


Eoin Treacy's view Following yesterday's review of companies that are likely to benefit from the trend towards further industrial automation, I thought it would also be timely to revisit another sector which is likely to enhance productivity over the next decades; nanotechnology. (Also see Comment of the Day on December 28th) .

Advances in materials science are increasingly coming through as marketable products, not least in the energy efficiency field. Part of the response to any bull market in energy is that we see advances in how to increase supply. The advent of unconventional oil and gas are the leading contender in this cycle. On the other side of the equation we can expect innovation in how efficiently we consume energy. The nanotechnology sector promises to deliver these types of innovations over the coming decades.

BASF, Honeywell, Precision Castparts, Calgon Carbon, Hexcel Corp, Schulman A. Corp and Rolls Royce all rallied impressively over the last couple of months but have at least paused and are now in varying stages of reverting back towards their 200-day MAs. Sustained moves below these trend means would be required to question medium-term scope for additional upside.

Cabot Corp pulled back sharply two weeks ago on disappointing earnings but has stabilised near $36.50 and a sustained move below that area would be required to question current scope for some additional higher to lateral ranging.

Sherwin Williams continues to extend its steep uptrend and a break in the progression of higher reaction lows would be required to challenge the consistency of the advance.

Johnson Controls has been consolidating above the 200-day MA since early January and a sustained move below $29 would be required to question recovery potential.

Siemens pulled back sharply over the last three weeks to test the lower side of the underlying trading range and the region of the 200-day MA. It will need to continue to hold above $76.50 if the benefit of the doubt is to continue to be given to the medium-term upside.

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