Category: Equity Leaders Weekly

Yesterday was a great day for stock watchers, as substantial moves were in play, offering valuable insights. Much like a card player who inadvertently reveals their hand, the market exposed key information about potential next steps for both asset classes and sectors. If you asked 50 people what the big move was yesterday, many would point to the banks, but steelmakers and the auto industry also saw big moves, signaling potential opportunities for investors. In this Equity Leaders Weekly, we’ve built a custom steel manufacturing matrix to analyze the best stocks in this sector.

This week, we are focusing on bisecting the energy trade, starting with Exxon Mobil as a proxy for big oil, then examining Weatherford for the service industry, and identifying outperformers like Targa Resources and TC Energy Corp in the Pipeline and Infrastructure sector. Today, we will explore the Bullish Percent Index (BPI), which provides insights into money flows and serves as a key tool for elite investment advisors. Using bullish percents alongside technical analysis enhances our understanding of the market, much like recognizing shifts in bullish signals is essential for spotting opportunities—akin to timing a leap as a cliff diver in Hawaii.

The Bank of Canada’s governing council has lowered the benchmark policy rate by half a percentage point to 3.75%, marking the fourth consecutive cut since June. Despite this, bond prices are under pressure and have unexpectedly dropped to last place in the asset class rankings, suggesting that market rates could rise instead of decline. The recent breakout in precious metals prices further signals growing inflation risk, indicating that even traditional safe havens like bonds are struggling to maintain value.

This week, North American markets experienced modest gains, with the S&P 500 up 1.59% and the Russell 2000 gaining 3.42%. In contrast, consumer staples are lagging behind, as seen in the underperformance of the Invesco S&P 500 Equal Weight Consumer Staples ETF, which posted a -0.81% return for the month. Meanwhile, discretionary stocks are thriving, with ETF proxies delivering monthly gains of 5-10%, indicating a prevailing risk-on sentiment among investors as they seek higher returns in the current market environment.

As the large-cap markets in the US and Canada face resistance from their prior gains, small- and mid-cap stocks have quietly gained momentum, presenting new investment opportunities. This document examines the recent sector rotation and the performance of small-cap equities, offering insights into potential strategies for capitalizing on this emerging trend.

As we conclude the third quarter, this “Equity Leaders Weekly” offers an opportunity for a quarterly review using a top-down approach to assess the broader market landscape. At SIACharts, the focus on relative strength helps identify promising investment opportunities while managing risk effectively. Recent performances highlight the strength of U.S. Large Cap stocks, with standout names like 3M, Lockheed Martin, and IBM delivering impressive returns. These results underscore the methodology’s effectiveness in guiding advisors toward high-performing equities amidst market volatility.

This week saw an intriguing market response to a surprising stimulus package from China, which positively affected global markets and commodity prices. The China Mainland ETF (FLCH) rose by 11.53%, while the China Hong Kong ETF (FLHK) gained 7.41%, and Taiwan’s ETF (FLTW) increased by 5.79%. Notably, the BMO China Equity ETF (ZCH.TO) emerged as a highlight in our newly established Custom China universe matrix.

Despite market volatility, the recent cut in the Federal Reserve’s benchmark interest rate suggests potential support for big-ticket purchases in the auto sector. General Motors (GM) stands out, and if “as goes GM, so goes the economy” holds true, America might be great again. Other notable performers from this analysis include Italian maker Ferrari and preeminent Chinese EV manufacturer NIO, while the Physical Palladium ETF also ranks highly, indicating growth potential as the sector stabilizes.

Amidst the market’s flight to safety, the Consumer Staples Select Sector SPDR ETF (XLP) has demonstrated solid performance with a breakout towards resistance at $86.82. Leading holdings such as Walmart, Costco, and others have driven this strength, reflecting the sector’s role as a safe haven amid market volatility. With an SMAX score of 9 out of 10, XLP highlights strong relative performance and continued opportunities in defensive stocks. In this report, we will explore XLP and its holdings to identify key opportunities for investment.

September began cautiously, with major U.S. indexes experiencing declines and European markets following suit. Commodities are facing mixed pressures, with crude oil falling sharply and copper under strain, while the Japanese yen strengthens and gold remains stable, indicating a shift towards defensive assets. In this report, we highlight the iShares U.S. Utilities ETF (IDU) as a safe harbor for growth investors and the Crude Oil Continuous Contract (CL.F) as an underperformer amid ongoing Middle Eastern conflicts.