What Is Hot…What Is Not
In looking at how the
markets have been reacting,
it has given rise to a number of questions as to where the next
leadership is going to come from. With the choppiness of the markets,
leaders come in and go out just as fast. We
know for a fact that the tech sector is not leading the way up,
at least not just yet.
What I have been noticing is
industries like the banks, homebuilders, medical and healthcare
facilities have been generating the majority of new highs. Techs are
getting smacked around like a wet towel. Since I have been writing
this commentary,
you
probably noticed that I have not given many (if not any) tech
names….unless you want to see some potential shorting opportunities.
So now we know what is hot
and what is not, but hot does not mean leadership. It just means stuff
that is moving right now with the current market environment.
Uh oh! CNBC just had an
segment on homebuilding stocks and whether they should it be in your
portfolio.
I guest this is my cue to show some stocks that are exhibiting some
constructive patterns WHICH ARE NOT TECH stocks, but actually one
homebuilder among others.
Out of the blocks first is
Sunrise Assisted Living (SRZ)
is moving up the right side of its multi week cup. The company has
shown a steady increase in earnings per share (76%,
86%
and 189%). and analyst expect a 15% increase in earnings for next
year.
Shuler Homes (SHLR)
is forming a handle to a seven plus week cup. The homebuilder has
increasing earnings of 26%, 55%,
123%
and 27% over the last 4 quarters. Sales on a quarter over quarter
basis have been increasing 4.54%, 38.5%, and 38.1%. Analyst are
estimating an earnings growth for 2002 of approximately 10%.
Green Point Financial (GPT)
looks poised to test its high.
Turning our attention to
ETF’s,
the Oil Service HOLDR
(OIH)
moved up 5.6% as uncertainty looms as to what OPEC will do with regard
to production.
Telecom Brasileiras fund (TBH)
moved convincingly higher in the session tacking on 4.6%.
Also gaining were the
Internet HOLDRs
(HHH)
which tacked on 4.6%.
Funds losing ground on
Friday were the B2B Internet HOLDRs
(BHH)
which slid 3.1%.
The Morgan Stanley High Tech
35 Index Fund (MTK)
lost 2.9% on light volume and the Internet Infrastructure HOLDRs
(IIH)
lost 2.5%.
Remember that all securities
are risky. In any trade, you should always reduce your risk by
adjusting position size and placing open protective stops where
you will sell your long or cover your short in case the market turns
against you. For an introduction to combining price stops with
position sizing, see Loren’s lesson, Risky
Business.
Have a great weekend!
Greg