Part Two of the DWA Market Analysis Report.
SECTOR UPDATE:
As you might have suspected, it was an active week with
respect to sector movement. There were 32 sectors moving down
this week while one sector moved up. Not too surprisingly, the
Precious Metals sector surged hitting 62% this week. That is the
highest level for that sector since 1996, three years ago! Those
sectors reversing down to O's this week were Buildings, Drugs, Non-
Ferrous Metals, Oil, Semiconductors, Telephones, Textiles, Electric
Utilities, and Gas Utilities.
Needless to say, the sector bell curve below is shifting
sharply to the left or oversold side. On August 4th when the NYSE
Bullish Percent reversed down, there were only two sectors at 38% or
lower. Today there are 21 sectors, about half of the groups, that are
at the 38% level or lower. There are currently three sectors at 30% or
lower and another five sectors at 32%. This is one of the silver
linings to the black cloud and that is there will be great opportunities
coming up once these sectors begin to reverse up.
Two sectors were close to reversing down, less than a percent
away. They were the Media group which is only .1% from a reversal
down and the Software group which is .7% away from a reversal
down,
September 29, 1999
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wast |
text hous |
rest util tele game
mach leis medi SOFT
auto heal chem comp metl
bank frst tran prot elec
insu retl food semi retl oil gas
aero buil finl osrv latn REAL asia
wall inet busi savg stee biom EURO PREC
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10% 30% 50% 70% 90%
Sectors At or Below 50% and in a Column of X's on Their Bullish Percent Charts:
Real Estate (44.2%) - Bull Confirmed
Sectors Below 30% and in a Column of O's (watch for a reversal up):
Aerospace/Airlines (25.7%) - Bear Confirmed
Insurance (25.3%) - Bear Confirmed
Wall Street (22.6%) - Bear Confirmed
** Note: There are several sectors at 32% (Auto & Auto Parts, Banks, Buildings, Internet, and Retailing)
Five Lowest Sectors For the Sector 5 Theory:
Wall Street 24% Merrill Lynch (MER)
Insurance 26% American International Group (AIG)
Aerospace/Airlines 26% Boeing (BA)
Auto & Auto Parts 32% General Motors (GM)
Banking 32% Citigroup (C)
Buildings 32% Home Depot (HD)
Internet 32% America On-Line (AOL)
Retailing 32% Wal-mart (WMT)
SUMMARY OF INDEX RELATIVE STRENGTH CHANGES
FOR THE WEEK
This week there were a couple of changes on the index
relative strength charts. There were two reversals and one change in
signal. The MS Cyclical Index (CYC) reversed down into O's and
the Gold & Silver Index (XAU) reversed up into X's, and also moved
to an RS buy signal.
A few indexes moved higher on their RS charts (put in more
X's) and they were the ADR Index (ADR), Interactive Internet Index
(IIX), CBOE Internet Index (INX), Morgan Stanley High Tech Index
(MSH), CBOE Technology Index (TXX), and the Telecom Index
(XTC). Those indexes which fell lower on their RS charts (put in
more O's) were the Chemical Index (CEX), Forest & Paper Index
(FPP), Insurance Index (IUX), and the S&P Transportation Index
(TRX). All in all, the index RS strength continues to be in the
technology arena. One note, watch the Retailers - the RLX was very
close to reversing up into X's this week.
MUTUAL FUNDS
The MU100 reached the 30% level on Tuesday. We are still
on defense concerning large cap US exposure but, like many of the
other indicators, is now at oversold levels. Cash positions should be
maintained and new money earmarked for this group should remain
on the sidelines until we see a reversal up in the MU100 and other
short term indicators. One bright spot this week in the MU100, there
were 4 stocks in this universe which reversed up on their Relative
Strength charts versus the Dow. Those four stocks were America
Online (AOL), GTE Corporation (GTE), Procter & Gamble Co (PG),
and Sprint Corp (FON). The majority of these stocks in the MU100
are on the oversold side ten week trading band. The average level of
-23.2% is approximately the level we have recorded for the last four
months.
Though Large Cap US is suffering, many International and
Global funds still enjoy strong technical strength. Funds like
EuroPacific Growth (AEPGX) and Janus Worldwide (JAWWX) are
the type of funds you will want to have for your Non United States
exposure. These offshore asset classes are doing very well.
However, it is best not to inject sideline money that is earmarked for
the United States. If you overweight in offshore mutual funds now,
you may find yourself unable to take the full exposure to the US
when the indicators allow. Risk-Reward is more favorable for the
US fund classes due to the oversold nature of the majority of the US
large cap mutual funds.
Below is a partial list of this week's Relative Strength Buy
signals for you to review. These names will be good prospects for
new money when the short term indicators reverse to the upside.
You can access the rest of this report in Mutual Fund Central under
the Daily Reports Link.
Symbol Name RS Style
Date
SBIEX Smith Barney Intl Equity A 09/28/99 Large Cap
RTBCX Rightime Blue Chip 09/28/99 Large Cap
PVOBX Putnam Voyager B 09/28/99 Large Cap
PMNPX Puget Sound Mrkt Ntrl PtInv 09/28/99 Med Cap
PBHLX PBHG Large Cap Growth 09/28/99 Large Cap
ODVCX Oppenheimer Developing Mkt C 09/28/99 Small Cap
OCGCX One Group Inv Cons Grow C 09/28/99 Large Cap
NYSAX New York Equity 09/28/99 Large Cap
NGIBX Nations Marsico Gr & Inc IvB 09/28/99 Large Cap
MLCEX Monetta Large-Cap Equity 09/28/99 Large Cap
MIFCX Mercury International C 09/28/99 Large Cap
JOGCX ASAF Janus Overseas Growth C 09/28/99 Large Cap
JABRX Janus Aspen Balanced Retire 09/28/99 Large Cap
IVNCX Ivy International C 09/28/99 Large Cap
HAINX Harbor International 09/28/99 Large Cap
FNEEX 59 Wall St European Equity 09/28/99 Large Cap
FKRCX Franklin Gold A 09/28/99 Med Cap
FIEUX Fidelity Europe 09/28/99 Large Cap
FDPMX Fidelity Sel Prec Mets&Mins 09/28/99 Small Cap
EKWBX Evergreen Precious Metals B 09/28/99 Small Cap
EGRCX Enterprise Growth and Inc C 09/28/99 Large Cap
CPGRX Chesapeake Aggressive Growth 09/28/99 Med Cap
COAGX Caldwell & Orkin Market Opp 09/28/99 Large Cap
BRGIX Bridges Investment 09/28/99 Large Cap
AMCGX Alger MidCap Growth B 09/28/99 Med Cap
ADBBX Advantus International Balanc 09/28/99 Large Cap
Franklin Gold A
FKRCX (09/28/1999) 10.66 Up 0.250
D Scale
17.50 | | | | 17.50
-17.00 ------+-----+-+---------+-----------17.00
16.50 | * | | 16.50
16.00 ------+-----X * --------+-----------16.00
15.50 * | X O * | 15.50
15.00 ----X * ----2 O --* ----+-----------15.00
14.50 X O * X 3 * | 14.50
14.00 ----9 O 7 * 1 6 ------* +-----------14.00
13.50 6 B 4 O X 7 * 13.50
13.00 ----X O 3 O X B --------+-* --------13.00
12.50 X 1 X A * 1 | * 12.50
12.00 ------O X * +-4 --------+-----------12.00
11.50 O * | 6 | 11.50
-11.00 ------* ----+-7 --------+-----------11.00
10.50 | | 9 | X 10.50
10.00 ------+-----+-A X ------+---X -- Top10.00
9.50 | | B 4 O 5 9 Med9.50
9.00 ------+-----+-O 3 O A --4 O X ------9.00
-8.50 | | O X 6 X O X O X Bot8.50
8.00 ------+-----+-C X O X O X O --------8.00
7.50 | | 1 7 9 C | 7.50
7.00 ------+-----+-+---8 X --+-----------7.00
6.50 | | | O X | 6.50
6.00 ------+-----+-+---O ----+-----------6.00
5.50 | | | | 5.50
5.00 ------+-----+-+---------+-----------5.00
-4.750 | | | | 4.750
4.500 | | | | 4.500
4.250 | | | | 4.250
4.000 --+-----+-+---------+-----------4.000
3.750 | | | | 3.750
3.500 | | | | 3.500
3.250 | | | | 3.250
3.000 9 +-9 9 9 9 9 ----9 +-9 --------3.000
2.750 4 | 5 5 7 6 8 8 | 9 2.750
One of the moves this week was the Precious Metals
Sector. Franklin Gold (FKRCX), the top performer year to
date among the precious metals mutual funds, broke a
double top at $10. This is the second consecutive buy signal
on the long term trend chart. Relative strength gave a buy
signal and weekly momentum turned positive this week.
Both investors and traders need to be aware that this fund as
well as the other peers in the precious metals group are
trading below the bearish resistance line. Investors typically
avoid a mutual fund that has a negative trend. Profile your
client accurately before investing in the precious metals
group. Asset allocation advocates of the precious metals
sector typically never take more the a ten percent exposure
to this group.
Enhance your mutual fund strategy using the DWA mutual
fund database. Employing a logical and systematic method to your
mutual fund investment strategy, breeds more success in client
acquisition and retention. If you would like a free two week trial of
our mutual fund database please call Steve and he will be glad to help
you if you have questions.
STOCKS CHANGING COLUMNS ON THEIR RS CHARTS
Each week we list those stocks that gave relative strength
buy or sell signals. We also want to bring to your attention those
stocks that change columns on their relative strength charts. This
gives us a better idea of how the stock is performing relative to the
market right now. This information also helps us get in on the
beginning of a new trend which maybe forming. It can also be used
as a filter when looking for stocks to buy or short. Always be sure to
consult the individual trend chart of a stock before taking a position.
We have decided to try a new look here that should provide more
information and be more helpful to you.
Legend:
RS Sign: The actual signal of the relative strength chart.
Buy would indicate the relative strength chart is on a double top buy
signal and a Sell would indicate the strength chart was on a sell
signal. This is the long term relative strength and can last several
years
RS Col: Shorter term in nature but very useful as it lasts
several months and can be a very important indication of how the
stock is currently performing compared to the overall market. We
watch these changes each week very closely
Trend: + indicates the stock is above the bullish support
line indicates the stock is below the bearish resistance line
Stocks Reversing To a Column of X's on Relative Strength Chart
Symbol Sector Company Name Price RS RS Col Trend
ALV BPAUTO Autoliv Inc 37.313 Sell X +
DY BPBUIL Dycom Industries Inc 39.500 Buy X -
FHCC BPBUSI First Healthgroup Corp 23.688 Sell X +
IRM BPBUSI Iron Mountain Inc. 33.438 Buy X +
ITRA BPBUSI Intraware Inc. 26.938 Sell X +
PAYX BPBUSI Paychex, Inc 33.469 Buy X +
PMK BPBUSI Primark Corporation 28.688 Sell X -
DCTM BPCOMP Documentum Inc 22.250 Sell X +
DGN BPCOMP Data General Corp 20.938 Sell X +
SQNT BPCOMP Sequent Computer Sys Inc 18.000 Sell X +
TAN BPCOMP Tandy Corp 49.938 Buy X +
AZN BPDRUG Astrazeneca Group PLC Ads 42.375 Sell X -
NRES BPELEC Nichols Research Corp 25.938 Sell X +
PKE BPELEC Park Electrochemical Corp 32.000 Sell X +
PG BPFOOD Procter & Gamble Co 98.938 Buy X +
HET BPGAME Harrah's Entertainment Inc 26.813 Sell X +
AGN BPHEAL Allergan Inc 105.250 Buy X +
HAR BPHOUS Harman International Inds Inc 43.875 Sell X +
AOL BPINET America Online 109.688 Sell X +
CMGI BPINET CMG Information Services Inc 98.125 Sell X +
ITVU BPINET Intervu Inc. 37.375 Sell X -
TVGIA BPMEDI TV Guide Inc. 39.125 Buy X +
AR BPMETA Asarco Inc 27.000 Sell X +
MND.A BPOIL Mitchell ENERGY&DEV CL A 21.562 Sell X +
MND.B BPOIL Mitchell Energy & Dev 21.125 Sell X +
NEM BPPREC Newmont Mining Corp 27.063 Sell X +
RELY BPSAVI Reliance Bancorp Inc 36.875 Buy X +
BTY BPTELE British Telecommunications 158.000 Sell X -
CLNTF BPTELE Clearnet Communications 18.063 Sell X +
CYCL BPTELE Centennial Cellular Corp 55.625 Buy X +
FON BPTELE Sprint Corp 54.750 Buy X +
FTE BPTELE France Telecom S.A. 83.313 Sell X +
GILTF BPTELE Gilat Satellite Networks 52.625 Sell X -
GTE BPTELE Gte Corporation 77.125 Sell X +
NKE BPTEXT Nike Inc 56.625 Sell X -
Stocks Reversing To a Column of O's on Relative Strength Chart
Symbol Sector Company Name Price RS RS Col Trend
AFFX BPBIOM Affymetrix 91.000 Buy O +
GENZ BPBIOM Genzyme Corp 45.313 Buy O -
MAK BPBUIL Group Maintenance America 10.000 Sell O -
HPC BPCHEM Hercules Inc 28.250 Sell O +
MMC BPINSU Marsh & McLennan Cos Inc 66.000 Sell O -
SFX BPLEIS SFX Entertainment 33.813 Buy O -
DHR BPMACH Danaher Corp 48.313 Buy O +
TFX BPMACH Teleflex Incorporated 38.500 Sell O +
APC BPOIL Anadarko Petroleum Corp 29.000 Sell O -
ENC BPRETA Enesco Group Inc 15.313 Sell O +
KOPN BPSEMI Kopin Corporation 25.500 Sell O -
RMBS BPSEMI Rambus Inc. 64.063 Buy O -
THNK BPSOFT Think New Ideas Inc 7.563 Sell O -
IIT BPTELE Perusahaan Indar Sat Adr 12.750 Sell O +
WCII BPTELE Winstar Communications 42.188 Buy O -
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