Stocks: The Good, The Bad and The Ugly
Vulnerable mega-caps, leaders within energy and a quick word on CPI
Good morning advisors!
Quick update on October CPI which just came across the wire:
Core CPI MoM: +0.3%, less than +0.5% expected
Core CPI YoY: +6.3%, less than +6.5% expected
Headline CPI MoM: +0.4% less than +0.6% expected
Headline CPI YoY: +7.7% less than +8.0% expected
Indexes soared on the news in the pre-market (S&P futures +2.8%; Dow +2.1%, Naz +3.7%) while bond yields and the dollar tanked. The initial reaction always seems to be wrong (remember last month’s report), but this seems like generally good news. Nobody reading this is a day trader, but here are the key levels to watch on the S&P 500 over the next few days:
3807. This has been a key pivot point over recent months. Futures indicates we should open above this level.
3859. Flirting with this level pre-market, bulls at least want to see us take out what has been the high-water mark for the week.
3911. Most significant of all, a breakout above this level would mean we have a higher high and a higher low. Would set up the 200-dma as next resistance.
That said, let’s get into today’s edition of Stocks: The Good, The Bad and The Ugly. In today’s report we will look at:
The leading stocks within energy
Vulnerable stocks within the super mega-caps
Stocks to avoid within healthcare
Opportunities in materials
The worst industrial stocks
Leaders within energy
Energy stocks were slammed on Wednesday, and the sector was the worst performer down 4.9%. However, energy is still leadership and the stocks we’re looking at here are the best of the best. $131 looks like a place to start nibbling at HES which is in a solid uptrend vs. the broad sector (vs. XLE in bottom panel).
MPC: Marathon Petroleum
MPC was the second-best stock in the energy sector yesterday, with only a 2.7% decline. A significant amount of support can be found in the range from $106-$113 and relative performance vs. XLE is turning up right where you would expect it to.
Schlumberger was also a relative outperformer on Wednesday falling less than 3%. That shouldn’t be a surprise looking at the bottom panel. First support at $50 followed by $46.
The super mega-caps
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