Stock Trends

Are you sure the economy is slowing?

Good morning,

Most of my subscribers are financial advisors. And while a financial advisor who pays good money for technical research might be more likely than the average advisor to pick individual stocks, I know plenty of you do not.

I named this report Stock Trends because I want it to be helpful and informative to everybody, regardless of how you manage client money.

Even if you are an ETF or mutual fund investor, the bottom-up work should leave you better informed, whether for top-down portfolio management or just client conversations.

And as I go chart by chart this week, one of my biggest takeaways was:

Are you sure the economy is slowing?

That seems to be the consensus on Wall Street, and even many of last year’s biggest bulls have acknowledged a slowing economy and a labor market badly in need of rate cuts.

I’m not here to argue the data points or where Fed funds should be. But when we look at the stock market, which often leads the economy, at the very least the “stock trends” suggest that things may be looking up over the next 6-12 months.

This week, we’ll review:

• Bellwether cyclicals hitting 52-week highs

• Large growth stocks on our Hot List delivering big gains

• China trade ideas

• Semiconductors

• and more!

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Are you sure the economy is slowing?

The following cyclical stocks are all making 52-week highs this week. You could try and write off Caterpillar on the China news, but good luck with the other ones.

CAT: Caterpillar

CAT’s 6-month base measures to $454/share, 18% above current levels.

URI: United Rentals

URI is one of the 6 cyclical stocks in the S&B 20 Index and it’s hitting new all-time highs and breaking out on a relative basis. We’ll look at that cyclicals basket hitting new all-time highs in next week’s Playbook along with bullish signals from a variety of risk ratios.

HD: Home Depot

No China exposure here. Just the consumer discretionary sector’s third largest holding breaking out to its highest level since January 2022.

SHW: Sherwin-Williams

You know what happens when you build a lot of things? You have to paint the inside. SHW is out of a massive 3-year base that technically measures to $500/share.

PH: Parker-Hannifin

What are motion and control technologies? Who knows?! Your guess is as good as mine but that’s what Parker-Hannifin does and this top 15 holding in the industrials sector keeps on keeping on. Still another 7% before its measured target from the recent base is hit.

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The large growth stocks on the Hot List are soaring

META broke out

When we put META on the Blue Chip Hot List at the beginning of the month, the bet I wanted to make was that in a secular bull market, this was a base, not a top. The Zuck delivered and we’re already up more than 10%. A conservative measured target would be $610.