Category: Equity Leaders Weekly

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.

As August comes to a close, brokers are preparing for a dynamic fall session with the Federal Reserve signaling a potential shift in monetary policy, including possible interest rate cuts. Amidst this backdrop, the US Dollar Index (DX2.F) has recently hit an eight-month low, reflecting the inverse relationship with surging gold prices. Conversely, the Dow Jones Industrial Average (DJI.I) has shown remarkable resilience, reaching new highs and benefiting from a weaker USD that boosts international exposure.

Gold has surged to new all-time highs, surpassing previous resistance levels as it benefits from ongoing political uncertainty and the prospect of rate cuts in the U.S. Meanwhile, the S&P/TSX Composite Index has reached new highs, driven by strong performances in the Energy, Banks, and Mining sectors. The TSX.I has regained momentum after a recent market selloff, with further gains possible if it closes above 23,297.12.

U.S. markets advanced with notable gains, particularly the Nasdaq Composite, which surged 6.15%. In this week’s edition of Equity Leaders Weekly, we examine the Nasdaq Composite Index (NASD.I) and its performance amidst recent volatility and shifting tech stock dynamics. We will analyze key support and resistance levels to assess the index’s outlook. Additionally, we’ll discuss the BMO Equal Weight Banks ETF (ZEB.TO) and its recovery from recent declines, focusing on its performance in light of evolving interest rate expectations and key resistance points.