Market Offers New Growth Amidst the Dead Wood

Perhaps the most incredible aspect of the market, for traders, is the ever-changing landscape of investment opportunities.

I spend a lot of time telling followers that the rules have changed. The relationships experienced traders hold dear have changed. The metrics have changed. The world has changed. The younger generation has turned to socially conscious investing – something I cover in my book, by the way. Young blood and passion for trading has changed.

And I say, bring it!

As a result, I still rely on the tried and true Economic Modern Family. The Family never steers me wrong. For example, Granny Retail (XRT) and her resilience kept us in our long positions and prevented us from getting bearish – no small feat if one looks at all the doom and gloom out there.

I have received comments on XRT and its weighting in e-commerce. Although true, it has other components that have lagged for years. Besides, it hardly explains why XRT is consolidating in an accumulation phase, while AMZN soared to new all-time highs. And, as a balanced ETF, a retail chain like Big Lots (BIG), for example, has a 1.54% weight in the XRT basket.

A boost in these components is good for the economy, and not just in the “Don’t fight the Fed” way.

Here are the top 10 Sectors in the XRT ETF:

  1. Apparel & Accessories Retailers 15.97%
  2. Discount Stores 14.96%
  3. Other Specialty Retailers 14.48%
  4. Auto Vehicles, Parts & Service Retailers 13.60%
  5. Department Stores 12.05%
  6. Internet Services 7.56%
  7. Food Retail & Distribution 6.99%
  8. Drug Retailers 5.47%
  9. Computer & Electronics Retailers 2.92%
  10. Leisure & Recreation 2.17%

What excites me most though, is the newer issued stocks in a myriad of sectors. We seek not to trade Apple, Google, Regeneron and Netflix at these bloated levels – rather, we wish to find the next Apple, Google, Regeneron and Netflix.

This week’s presentation on StockCharts TV (below) is a 30-minute educational and actionable YouTube video. The video begins with a look at the Economic Modern Family, particularly why Friday ended up as such a clutch hold of support day. From there, I give you an update on the stagflation indicators – gold, silver, copper, and agriculturals. You will see why we took some profits in our metals, while we continue to watch the grains base out. Then, I cover one of my favorite emerging markets, Vietnam (VNM).

The second half of the presentation takes you through a full analysis of seven newer stocks. The list of stocks:

  • 89Bio ETNB
  • Huiz Holding HUIZ
  • Kimberly Royalty Partners KRP
  • Kura Oncology-KURA
  • Vaxcyte –PCVX
  • Redhill Biopharma RDHL
  • Sangamo Therapuetics SGMO

For now, the primary focus is on healthcare and biotech. Plus, I give you entries, stops and targets in all these picks. In the next few weeks, I will cover newer-issued stocks in tech and clean energy.

Also, check out my interview on Cheddar – The Closing Bell 07-09-20:

  • S&P 500 (SPY) 318.22 is a gap that must fill. 315 pivotal, 310 support
  • Russell 2000 (IWM): 141, then 137 support; 146.25 resistance
  • Dow (DIA): 262.45 resistance to clear
  • Nasdaq (QQQ): Missile to new highs again
  • KRE (Regional Banks): Reversal pattern confirmed Friday. One to keep watching this week
  • SMH (Semiconductors): 160 was my target, now hit. But if holds 155, could see higher
  • IYT (Transportation): 161.50 pivotal support, 170 resistance
  • IBB (Biotechnology): 138.25 support
  • XRT (Retail): 43.40 huge support, 45 resistance
  • Volatility Index (VXX): Nothing to see here unless it clears 35.00
  • Junk Bonds (JNK): 104.50 resistance, 101.50 support
  • LQD (iShs iBoxx High-Yield Bonds): 134.90 support

Mish Schneider

Director of Trading Research and Education