New All Time Highs on NYSE.AMEX and NASDAQ
Eoin Treacy's view The relative strength of the US Dollar, the outperformance of the banking sector
and the Russell 2000 breaking upwards to new all-time highs are all noteworthy
and can be considered positives from the perspective of stock market investors.
The speed with which the S&P500 rallied from the October/November lows to
the June peak and the size of the subsequent pullback suggests that some time
is required for the market to regroup before significant new highs can be sustained.
However, even assuming that the wider market is likely to range, some shares are already breaking upwards to new all time highs. I used the Chart Library's High/Low Filter to identify companies on the NYSE, AMEX and NASDAQ exchanges that have posted new all time highs in the last five days. I then used Bloomberg to create a table displaying market cap, P/E ratio, dividend yields, price, the latest value for the 200-day MA and the industry subsector. I then segmented the results by companies with a market cap of greater than $1billion and those with a smaller market cap. A number of ETFs also appeared in the results and I grouped these at the end of the list.
A delegate at the May venue for The Chart Seminar mentioned that my view of the world seemed to be like that espoused by Peter Diamandis and Steven Kotler in their book, Abundance: The Future is Better Than You Think. I just finished reading it. The central premise of the book is that technological innovation is occurring at an exponential rate, that change is occurring at such a prodigious pace that the vast majority of people have no conception how much their lives are likely to change and that the shortage of resources we are all accustomed to dealing with is likely to become a thing of the past. I found it a compelling read and the optimism expressed is welcome, particularly when many pundits seem to spout nothing but pessimism. We can only guess at the timeline of exactly when these innovations will make a difference to our lives and at Fullermoney we will of course be guided by the price action.
The book came to mind when viewing the results of the above filter this morning. Of the ETFs, the Powershares Aero & Defence, Powershares Dynamic Biotech & Genomics, Powershares Dynamic Technology and Vanguard Consumer Discretionary have all posted new all-time highs in the last five trading sessions. Here are the top-10 holdings for each: Powershares Aero & Defence, Powershares Dynamic Biotech & Genomics, Powershares Dynamic Technology and Vanguard Consumer Discretionary. Veteran subscribers will be familiar with many of these shares from the various chart reviews posted in the Comment of the Day over the last five years. Many of these companies represent the confluence of major themes we have highlighted for a number of years i.e. the greatest urbanisation in history, the increasing pace of technological innovation and the potential for energy prices to trend lower in real terms from the latter half of this decade. The Autonomies represent a group of some of the most globally oriented companies we believe are most likely to benefit from these themes.
Some of the most noteworthy chart patterns include:
Carefusion completed a three-year base in January and continues to trend consistently higher. The most recent reaction is similar to that posted in March and a break in the progression of higher reaction lows would be required to question medium-term scope for additional upside.
Applied Industrial Technologies is an intermediary for industrial parts. In common with W.W. Grainger, it continues to trend consistently higher.
Stericycle completed a two-year range in March and found support near $105 from mid-June. A sustained move below that level would be required to question medium-term scope for additional upside.
Western Digital is particularly noteworthy for its low valuations. The share broke emphatically out a three-year base in April and while somewhat overbought in the short-term; the upside can continue to be given the benefit of the doubt provided it holds above the 200-day MA.
Whole Food Markets formed a reasonably orderly consolidation between October and May and a sustained move below $48 would be required to question medium-term scope for additional upside.
EnPro Industries is in the process of completed a six-year base and a break in the progression of higher reaction lows would be required to question medium-term upside potential.
Moog Inc broke successfully above $50 in May before consolidating for six weeks. It reasserted the medium-term uptrend last week and a sustained move below $50 would be required to begin to question medium-term upside potential.
It occurs to me that the outperformance of a significant portion of the military industrial complex may be influenced by the increasingly potent civilian applications of their technology.
Despite widespread pessimism about the pace of the US economic expansion, the fact that such a large number of restaurants, retail chains and regional banks are in positions of outperformance would suggest that there is cause for medium-term optimism.