Oppenheimer & Co. Inc. 85 Broad Street New York, NY 10004 Tel: 800-221-5588 Fax: 212-667-8229 Technical Analysis A division of Oppenheimer Asset Management Inc. Ari H. Wald, CFA, CMT Technical Analysis (212) 667-5279 [email protected]November 23, 2015 Technical Analysis: Inflection Points Discretionary and Industrials in Focus Tactical signals remain mixed (i.e., positive seasonals vs. narrow participation), but we side with large-cap strength and accordingly expect the S&P 500 to maintain a bid into year-end ahead of fresh rounds of contained volatility in Q1’16. We see this as a cyclical pause amid a secular advance where big-cap growth areas, like Technology, pull the cap-weighted index higher while bouts of commodity-themed weakness act as a headwind due to ongoing US dollar gains. Only 33% of NYSE stocks are in an uptrend, indicating 1) fuel for a market bounce but also 2) heightened risk of additional volatility once these stocks become overbought in broken trends. A new S&P high above 2134 is likely to go unconfirmed by this breadth measure in the coming weeks and, consequently, would likely mark a tactical sell signal, in our view. Industry/ETFs mentioned: Aerospace & Defense, Internet & Catalog Retail, Machinery, Media, Multiline Retail, FDN, IWN, MTUM, RCD, XLY. Highlighted picks with a confirming MAER score Buy and Sell ratings for the entire S&P 500 Consumer Discretionary sector are listed in the report. Highlighted ideas with a confirming earnings revisions score include: o Buy: AZO, DHI, GT, HD, IPG, PCLN, SBUX. o Sell: CBS, COH, DISCK, FOXA, OMC, PVH, TIF. Buy and Sell ratings for the entire S&P 500 Industrials sector are listed in the report. Highlighted ideas with a confirming earnings revisions score include: o Buy: CTAS, EFX, MAS, ROP, SNA. o Sell: DOV, EMR, ETN, FAST, KSU, PH, ROK. MAER is a stock screening tool based on trends in earnings revisions.
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November 23, 2015 Technical Analysis: Inflection Points€¦ · sector are listed in the report. Highlighted ideas with a confirming earnings revisions score include: o Buy: AZO,
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Oppenheimer & Co. Inc. 85 Broad Street New York, NY 10004 Tel: 800-221-5588 Fax: 212-667-8229
Technical Analysis A division of Oppenheimer Asset Management Inc.
Ari H. Wald, CFA, CMT Technical Analysis (212) 667-5279 [email protected]
November 23, 2015
Technical Analysis: Inflection Points
Discretionary and Industrials in Focus
Tactical signals remain mixed (i.e., positive seasonals vs. narrow participation), but we side with large-cap strength and accordingly expect the S&P 500 to maintain a bid into year-end ahead of fresh rounds of contained volatility in Q1’16.
We see this as a cyclical pause amid a secular advance where big-cap growth areas, like Technology, pull the cap-weighted index higher while bouts of commodity-themed weakness act as a headwind due to ongoing US dollar gains.
Only 33% of NYSE stocks are in an uptrend, indicating 1) fuel for a market bounce but also 2) heightened risk of additional volatility once these stocks become overbought in broken trends. A new S&P high above 2134 is likely to go unconfirmed by this breadth measure in the coming weeks and, consequently, would likely mark a tactical sell signal, in our view.
Buy and Sell ratings for the entire S&P 500 Consumer Discretionary sector are listed in the report. Highlighted ideas with a confirming earnings revisions score include:
o Buy: AZO, DHI, GT, HD, IPG, PCLN, SBUX. o Sell: CBS, COH, DISCK, FOXA, OMC, PVH, TIF.
Buy and Sell ratings for the entire S&P 500 Industrials sector are listed in the report. Highlighted ideas with a confirming earnings revisions score include:
o Buy: CTAS, EFX, MAS, ROP, SNA. o Sell: DOV, EMR, ETN, FAST, KSU, PH, ROK.
MAER is a stock screening tool based on trends in earnings revisions.
Tactical signals remain mixed (i.e., positive seasonals vs. narrow participation), but we side with large-cap strength and accordingly expect the S&P 500 to maintain a bid into year-end ahead of fresh rounds of contained volatility in Q1’16. Only 33% of NYSE stocks are in an uptrend, indicating 1) fuel for a market bounce but also 2) heightened risk of additional volatility once these stocks become overbought in broken trends. A new S&P high above 2134 is likely to go unconfirmed by this breadth measure in the coming weeks and, consequently, would likely mark a tactical sell signal, in our view.
Source: Oppenheimer Asset Management, and Bloomberg.
S&P 500 w/ 200-day m.a.
New highs likely to be unconfirmed by internal breadth
2134
NYSE Stocks Above 200-Day Mov. Avg.
?
Technical Analysis
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November 23, 2015
Bifurcated Performance to Continue
We don’t expect stock-level weakness to spread broadly, and a steep and prolonged market decline should therefore be avoided because the secular environment is bullish and near-zero interest rate policy should help postpone the next economic recession, by our analysis. We instead believe market action will continue to be characterized by bifurcated performance over the coming months, and potentially quarters, due to a growing list of stock-level breakdowns and the likely need to move sideways following four undisturbed years of gains. As a result, we recommend buying leadership areas, like FDN, on weakness, and selling laggards, like IWN, on strength.
Source: Oppenheimer Asset Management, and Bloomberg.
Relative to the S&P 500
Bullish? Buy FDN
Relative to the S&P 500
Dow Jones Internet ETF (FDN): Buy iShares Russell 2000 Value (IWN): Sell
Bearish? Sell IWN
Technical Analysis
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November 23, 2015
Opportunity to Buy Momentum (MTUM)
Relative to the S&P 500, the iShares Momentum ETF (MTUM) has corrected to the bullish slope of its smoothed trend which we define as a tactical buy signal. We see $70.50 as near-term support and ultimately expect a breakout above $74.50 resistance.
Source: Oppenheimer Asset Management, and Bloomberg.
We view near-term weakness amid long-term strength as a tactical buying opportunity
iShares MSCI Momentum ETF (MTUM)
Relative to S&P 500
Both panels w/ 200-day m.a.
Technical Analysis
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November 23, 2015
Cons Disc: Cap wgt (XLY) over Equal wgt (RCD)
We maintain our Overweight ranking of the Consumer Discretionary sector and, as a reflection of the market as a whole, strength has been concentrated in the largest capitalized stocks while the equal-weighted version of the sector has come under pressure. Analogous to our market preference for the highest rung of the capitalization ladder, we recommend buying the cap-weighted Consumer Discretionary SPDR (XLY) over the equal-weighted Consumer Discretionary ETF (RCD).
Source: Oppenheimer Asset Management, and Bloomberg.
Relative to Consumer Discretionary at the industry level, Internet & Catalog Retail (AMZN, EXPE, NFLX, PCLN) has been established leadership, and while tactically overbought, we expect this strength to continue over the long term. Conversely, Multiline Retail (JWN, KSS, M, TGT) has been an established laggard, and while it is tactically oversold, we don’t see signs that this underperformance is abating. Tactically, we see an opportunity to sell Media (CBS, DISCK, FOXA, OMC, SNI, VIAB) which is bouncing into resistance on a relative basis. Buy and Sell ratings for the entire sector are listed on the following pages along with the charts for our top momentum-based ideas.
Source: Oppenheimer Asset Management, and Bloomberg.
Tactical trade is to sell Media
Internet & Catalog Retail vs. Cons Discretionary
Media vs. Cons Discretionary
w/ 200-day m.a.
Multiline Retail vs. Cons Discretionary
Buy dips
Sell rallies
Technical Analysis
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November 23, 2015
S&P 500 Cons Discretionary: Buys
Source: Oppenheimer Asset Management, and Bloomberg.
MAER is a stock screening tool based on trends in earnings rev isions. MAER ratings range from established negative -3 to established positive +3.
MO is a composite score (scaled 0-100) based on a stock's 6, 9, and 12-month risk-adjusted return lagged 1 month.
Technical Analysis
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November 23, 2015
Buy: AZO, HD, NFLX, PCLN
Netflix (NFLX)
Home Depot (HD)
Priceline Group (PCLN)
Source: Oppenheimer Asset Management, and Bloomberg.
AutoZone (AZO)
All charts w/ 200-day m.a.
Uptrend resuming
Tactical pullback
Uptrend intact
Breakout intact
Technical Analysis
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November 23, 2015
Buy: DHI, GT, IPG, SBUX
Starbucks (SBUX)
Goodyear Tire (GT) Interpublic Group (IPG)
DR Horton (DHI)
Source: Oppenheimer Asset Management, and Bloomberg.
All charts w/ 200-day m.a.
Breakout
Breakout
Breakout intact Uptrend intact
Technical Analysis
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November 23, 2015
Sell: CBS, DISCK, FOXA, OMC
Twenty-First Century Fox (FOXA)
CBS Corp (CBS)
Discovery Communications (DISCK)
Source: Oppenheimer Asset Management, and Bloomberg.
Omnicom Group (OMC)
All charts w/ 200-day m.a.
Sell the bounce into resistance
Pre-breakdown candidate
Sell the bounce into breakdown point
Sell the bounce into breakdown point
Technical Analysis
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November 23, 2015
Sell: BBY, COH, PVH, TIF
Tiffany (TIF)
Best Buy (BBY)
Coach (COH)
PVH Corp (PVH)
Source: Oppenheimer Asset Management, and Bloomberg.
All charts w/ 200-day m.a.
Downtrend resuming
Breakdown intact
Breakdown intact
Breaking down
Technical Analysis
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November 23, 2015
Aerospace & Defense over Machinery
In our view, select exposure is warranted to the Industrials sector (Market Weight ranking) as the sector bounces from the lower end of its multi-year range relative to the S&P 500. Relative to Industrials, our top idea is to buy Aerospace & Defense stocks (BA, GD, HON, LMT, NOC, RTN) because the industry’s major breakout is intact. Conversely, we recommend selling Machinery names (CAT, CMI, DE, DOV, FLS, PCAR, PH) due to an established trend of underperformance. Buy and Sell ratings for the entire sector are listed on the following page along with the charts for our top momentum-based ideas. The rest of the sector is rated Hold.
Source: Oppenheimer Asset Management, and Bloomberg.
Aerospace & Defense an industry of leadership through the sector’s turn; we expect this to continue
Industrials vs. S&P 500
Aerospace vs. Industrials
w/ 200-day m.a.
Machinery vs. Industrials
Technical Analysis
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November 23, 2015
S&P 500 Industrials: Buys and Sells
Source: Oppenheimer Asset Management, and Bloomberg.
Ticker Name
Trend
Rating MAER
MO
score Industry
Mkt Cap
($mm)
EFX EQUIFAX INC Buy 3 97 Professional Services 13,001
Sell the bounce into resistance Sell the bounce into resistance
Technical Analysis
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November 23, 2015
Sell: EMR, ETN, KSU, ROK
Eaton Corp (ETN)
Rockwell Automation (ROK) Kansas City Southern (KSU)
Emerson Electric (EMR)
Source: Oppenheimer Asset Management, and Bloomberg.
All charts w/ 200-day m.a.
Pre-breakdown candidate Sell the bounce into resistance
Sell the first bounce
Sell the bounce into resistance
Technical Analysis
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November 23, 2015
Sector & Industry Snapshot: week of Nov 20
Our Sector & Industry Snapshot is a current and concise overview of the leaders and laggards throughout the equity market. As a proxy for trend and momentum, this tool screens a comprehensive list of broad market indexes, S&P sectors (relative to SPX), and all GICS level 3 industries relative to their respective sector. It is designed to be a differentiated performance table and an unbiased starting point to help generate trend-following or mean-reverting ideas.
Mo. measures the level of RSI (14-week). RSI calculates the avg. gain / avg. loss in a security over a specified period. High readings (colored red; above 60) mark overbought and low readings (colored green; below 40) mark oversold. Neutral readings are colored yellow (between 40 and 60).
As a proxy for Trend we use the crossover between the 50-day and 200-day moving average. A positive percentage (colored green) indicates how far the 50D is above the 200D and a negative percentage (colored red) indicates how far the 50D is below the 200D.
Absolute Price Momentum Mo. Trend Industry (GICL3) vs. Sector (GICL1) Mo. Trend Industry (GICL3) vs. Sector (GICL1) Mo. Trend
U.S. Dollar Index (DXY) 63 0% Chemicals 77 1% Life Sciences Tools & Services 68 1%
S&P 500 Index 55 -2% Construction Materials 61 11% Health Care Equipment & Supplies 63 2%
GENERAL DYNAMICS CORP GD New York 146.4 STANLEY BLACK & DECKER INC SWK New York 107.9
GENERAL ELECTRIC CO GE New York 30.6 TARGET CORP TGT New York 71.1
GAP INC/THE GPS New York 26.7 TIFFANY & CO TIF New York 75.2
GOODYEAR TIRE & RUBBER CO GT NASDAQ GS 34.1 TRACTOR SUPPLY COMPANY TSCO NASDAQ GS 89.9
WW GRAINGER INC GWW New York 199.1 TIME WARNER CABLE TWC New York 184.3
HOME DEPOT INC HD New York 128.6 TYCO INTERNATIONAL PLC TYC New York 35.6
HARLEY-DAVIDSON INC HOG New York 50.1 UNDER ARMOUR INC-CLASS A UA New York 91.1
HONEYWELL INTERNATIONAL INC HON New York 105.9 URBAN OUTFITTERS INC URBN NASDAQ GS 23.2
H&R BLOCK INC HRB New York 37.0 UNITED RENTALS INC URI New York 75.5
INTERPUBLIC GROUP OF COS INC IPG New York 23.4 UNITED TECHNOLOGIES CORP UTX New York 99.0
ISHARES RUSSELL 2000 VALUE E IWN NYSE Arca 96.2 VIACOM INC-CLASS B VIAB NASDAQ GS 52.1
NORDSTROM INC JWN New York 56.1 WYNN RESORTS LTD WYNN NASDAQ GS 59.4
KOHLS CORP KSS New York 46.2 CONSUMER DISCRETIONARY SELT XLY NYSE Arca 81.0
KANSAS CITY SOUTHERN KSU New York 93.7
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Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered byOppenheimer & Co. Inc:Stock Prices as of November 23, 2015Advance Auto Parts, Inc. (AAP - NYSE, $162.82, PERFORM)AMETEK, Inc. (AME - NYSE, $56.22, OUTPERFORM)Amazon.Com, Inc. (AMZN - NASDAQ, $668.45, OUTPERFORM)AutoZone, Inc. (AZO - NYSE, $783.82, OUTPERFORM)Bed Bath & Beyond Inc. (BBBY - NASDAQ, $53.62, OUTPERFORM)Best Buy Co. Inc. (BBY - NYSE, $30.51, OUTPERFORM)Comcast (CMCSA - NASDAQ, $62.90, OUTPERFORM)Comcast (CMCSK - NASDAQ, $24.18)Coach, Inc. (COH - NYSE, $30.55, OUTPERFORM)Cintas Corporation (CTAS - NASDAQ, $91.31, PERFORM)Emerson (EMR - NYSE, $50.16, PERFORM)Eaton Corp. (ETN - NYSE, $57.59, PERFORM)Expedia Inc. (EXPE - NASDAQ, $126.25, OUTPERFORM)Flowserve Corporation (FLS - NYSE, $45.74, PERFORM)FOSSIL, Inc. (FOSL - NASDAQ, $36.79, PERFORM)General Electric (GE - NYSE, $30.66, PERFORM)Gap Inc. (GPS - NYSE, $26.98, PERFORM)W.W. Grainger, Inc. (GWW - NYSE, $199.19, PERFORM)Home Depot Inc. (HD - NYSE, $130.21, OUTPERFORM)Honeywell International Inc. (HON - NYSE, $105.63, OUTPERFORM)H&R Block, Inc. (HRB - NYSE, $37.02, OUTPERFORM)Kansas City Southern (KSU - NYSE, $93.53)L Brands, Inc. (LB - NYSE, $93.94, PERFORM)Lowe's Cos. (LOW - NYSE, $75.77, OUTPERFORM)Mattel Inc. (MAT - NASDAQ, $24.54, OUTPERFORM)McDonald's Corporation (MCD - NYSE, $113.91, PERFORM)Netflix, Inc. (NFLX - NASDAQ, $123.84, OUTPERFORM)Newell Rubbermaid (NWL - NYSE, $44.41, PERFORM)O'Reilly Automotive, Inc. (ORLY - NASDAQ, $270.50, PERFORM)The Priceline Group Inc. (PCLN - NASDAQ, $1,281.53, OUTPERFORM)Rockwell Automation (ROK - NYSE, $105.18, PERFORM)Roper Technologies, Inc. (ROP - NYSE, $191.49, PERFORM)Starbucks Corporation (SBUX - NASDAQ, $61.99, OUTPERFORM)Staples, Inc. (SPLS - NASDAQ, $12.29, PERFORM)Tiffany & Co. (TIF - NYSE, $75.14, OUTPERFORM)Tractor Supply Company (TSCO - NASDAQ, $90.81, OUTPERFORM)Under Armour, Inc. (UA - NYSE, $92.01, PERFORM)Urban Outfitters Inc. (URBN - NASDAQ, $23.00, PERFORM)United Rentals, Inc. (URI - NYSE, $75.58, OUTPERFORM)
Technical Analysis
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Important Disclosures and Certifications
The research provided in this report is based on technical analysis provided by Oppenheimer Asset Management Inc., a nonmember affiliate of Oppenheimer & Co. Inc. Technical analysis is the study of price and volume and the interpretation of tradingpatterns associated with such studies in an attempt to project future price movements. Technical analysis does not considerthe fundamentals of the underlying corporate issuer and may offer an investment view that may appear inconsistent with otherresearch generated by Oppenheimer Asset Management Inc. This report does not constitute research regarding fundamentalfinancial information. The investments discussed in this report may not be suitable for all investors. Investors should usetechnical analysis as one input into formulating an investment opinion and should consult with their Financial Advisor.Additional inputs should include, but are not limited to, the review of other research reports generated by Oppenheimer AssetManagement Inc., and looking at the fundamentals of the underlying corporate issuer.
Analyst Certification - The author certifies that this research report accurately states his/her personal views about the subjectsecurities, which are reflected in the substance of this report. The author certifies that no part of his/her compensation was,is, or will be directly or indirectly related to the specific recommendations or views contained in this research report.
Potential Conflicts of Interest:Technical analysts employed by Oppenheimer Asset Management Inc. are compensated from revenues generated by thefirm. Oppenheimer Asset Management Inc. generally prohibits any research analyst and any member of his or her householdfrom executing trades in the securities of a company that such research analyst covers. Additionally, Oppenheimer AssetManagement Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member ofa company that such analyst covers. In addition to 1% ownership positions in covered companies that are required to bespecifically disclosed in this report, Oppenheimer & Co. Inc. may have a long position of less than 1% or a short position ordeal as principal in the securities discussed herein, related securities or in options, futures or other derivative instrumentsbased thereon. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specificdisclosures set forth below, may at times give rise to potential conflicts of interest.
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Company Specific Disclosures
Oppenheimer & Co. Inc. makes a market in the securities of ALLE, AMZN, BA, BBBY, CMCSA, CMCSK, CMI, CTAS, DAL,DISCA, DISCK, EXPD, EXPE, FOSL, FOX, NFLX, ORLY, PCLN, PWR, SBUX, SPLS, TSCO, UA, URBN, WYNN, FAST,FOXA, PCAR and VIAB.
Oppenheimer & Co. Inc. expects to receive or intends to seek compensation for investment banking services in the next 3months from CMCSA, CMCSK, GE, UA and URI.
Additional InformationPlease write to Oppenheimer Asset Management Inc., 85 Broad Street, New York, NY 10004. Attention: ComplianceDepartment.
Other DisclosuresThis report is issued and approved by Oppenheimer Asset Management Inc, a registered investment advisor, to its affiliates Oppenheimer& Co. Inc., Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited. This report may be further distributed by Oppenheimer& Co. Inc., for informational purposes only, to its institutional and retail investor clients. Oppenheimer & Co. Inc. transacts business on all