Cactus (WHD) – $3B market cap – Technicals: The stock is forming the right side of a stage-one 44-week cup-with-handle base and is approaching its pivot (9%). Fundamental ratings are solid with EPS Rank 80 and SMR Rating of A. Technical ratings remain mixed with RS Rating of 87, A/D Rating of C+, and Up/Down Volume ratio of 0.9. Industry Group Rank has improved to 40 from 63 five weeks ago.
Author: Kenley Scott
Kenley Scott is a senior equity analyst and sector strategist covering the APAC region and the Energy sector. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Kenley also writes the Global Sector Summary, part of the Sector Strategy service, which identifies emerging sector strength and weakness across 46 countries every week. After working as a commodities broker, Kenley joined the firm in July 2006. He has a B.S. in Statistics from the University of California, Riverside and also holds a Series 65 securities license.
Global Sector Strategy
Key Points:
- Global Index (VT) back above 40-WMA for second time recent. First failed in Dec. but established a higher low. Break above Dec. peak could be significant (+2%).
- Rally is different in the U.S. versus intl. markets:
- Intl markets, larger stocks and high RS stocks are leading in the first two weeks of 2023.
- In the U.S., it is opposite as smaller and lower RS stocks are generally leading.
O’Neil Energy/Material Weekly
Fluence Energy (FLNC) – $2B market cap – Technicals: The stock broke above the pivot of a stage-one cup base. It found strong support at its 10-WMA and bounced off this level. It has poor fundamental ratings, but this is not a gauge for fundamental setup for two reasons: 1) the company started operations just four years ago, and 2) it is yet to become profitable (expected by FY24).
Global Sector Strategy
Key points:
- FTD on the Nasdaq on Friday and very strong market breath. S&P 500, Nasdaq, Russell indices up 2%+ and finishing with highest close in three weeks.
- Continued strength in equal-weight vs. mkt. cap weight.
- S&P 500 equal-weight (RSP) with RS line breaking to 3-yr highs vs. S&P 500.
- Nasdaq 100 equal-weight (QQQE) continuing into 52-wk. highs vs. QQQ.
O’Neil Energy/Material Weekly
Ox2 (OX2.SE, Ox2:SS) – $2.4B market cap – Technicals: The stock is forming the right side of a stage-two 21-week cup-with-handle base and is approaching its pivot (2% away). Top-notch fundamental profile: EPS Rank 88 and SMR Rating of A. Mixed technical profile: RS Rating of 92, A/D Rating of B, and Up/Down Volume ratio of 0.5. Industry Group Rank has improved substantially in the last three weeks to 75 from 97. Company description: Ox2 develops and sells wind and solar farms
O’Neil Energy/Material Weekly
Tidewater (TDW) – $2B market cap – Technicals: The stock is building the right side of a stage-three cup base. It continues to trade above its 10-
WMA with mixed fundamental ratings (EPS Rank 71 and SMR Rating of D) and solid technical ratings (RS Rating of 99 and A/D Rating of B-).
Accumulate on a breakout of the pivot at $36.5. Company Description: Tidewater is the world’s largest offshore support vessel (OSV) operator by
fleet size
Global Sector Strategy
Key Points:
- 2021-2022 have been in-line with presidential cycle in that the first year has above average gains, and second year tends to be the weakest of the four years.
- Both were exaggerated in either direction, with 2021 doubling the already strong average for the S&P, but 2022 coming in extremely weak (worst since 2009).
- 2nd Year-by quarter was also in-line with history as Q1-Q3 were very weak, but Q4 provided a bounce.
Global Sector Strategy
Key Points:
- Another checkup on ARKK to Nasdaq 2000-02 comparison shows the continued similarities.
- In the fourth leg lower, each has dropped 40% over 18 wks.
- Arkk fourth leg still ongoing has tended to have more severe downside: 50% avg. drops vs. 44% for Nasdaq.
O’Neil Energy/Material Weekly
RPM International (RPM) – $13B market cap – Technicals: The stock broke out of a 44-week cup-with-handle base and is trading in the actionable range
of $97.9–102.8. It is attempting to break out of a two-year long sideways consolidation since November 2020 and is testing resistance at $101.5. Good
fundamental profile: EPS Rank 90 and SMR Rating of B. Improving technical profile: RS line is at multi-year highs with a strong RS Rating of 91 and an A/D
Rating of B.
O’Neil Energy/Material Weekly
Air Products (APD) – $70B market cap – Technicals: The stock is breaking out of a stage-one, 54-week cup base on strong volume. Strong
fundamental profile: EPS Rank 77 and SMR Rating of A, led by accelerating revenue growth and stable ROE and margins. Good technical profile: RS
line is at a 52-week high and trending upward. RS Rating increased to 95 from 66 in the past eight weeks. A/D Rating improved strongly over the
same period to A-, indicating very good accumulation
