Stock Trends
Trading like we're heading for world peace
Good morning,
I always try to have a few macro takeaways from doing the work for this report, and the biggest one this week is:
Aerospace and defense stocks are trading like we’re heading for world peace.
This rally’s lack of daily breadth remains a headscratcher, but our risk ratios have confirmed the move all the way up. And what better additional confirmation that the market couldn’t care less about the war, than selling aerospace and defense stocks straight down since it began.
Today, we’ll highlight four of the worst-looking charts to avoid, and also review:
Stocks to play the crypto rally
Energy stocks trying to make a stand
All-cap long ideas
Hot List updates
Notable earnings reactions
and more!
Aerospace and defense acts terribly
L3Harris completes a H&S top yesterday
We sold this for a 19% gain on January 29, not too bad in hindsight. Now, LHX is completing a multi-month top and relative strength is falling off a cliff. The head and shoulders targets $294, or roughly the breakout point at the beginning of the year.
TransDigm Group was underperforming before it was cool
A two-year top has been completed here and investors shouldn’t be encouraged by the weak bounce above the neckline. This is hitting 3-year relative lows and trending outright lower while SPX is at all-time highs.
Kratos Defense & Security Solutions has lost the 200-day
This had been support all the way since it broke out as an $11 stock in early 2023. Still horizontal support from $61-$64, but the performance of this group wouldn’t have me waiting to sell it.
