Part of the surge is natural as indices make new highs because the number of index and sector ETFs is bound to rise at the same time. Excluding ETFs by excluding all Financials, we see the numbers have also returned to very healthy levels over three weeks.
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.
O’Neil Energy/Material Weekly
Nextracker (NXT) – $3.3B market cap – Technicals: The stock is forming the right side of a stage-two cup base after reclaiming its 50- and
100-DMA on above average volume. Aggressive entry can be taken at the current levels. Fundamental profile: Excellent EPS Rank 98 and
Composite Rating of 87
O’Neil Energy/Material Weekly
CIMC Enric Holdings (ENRC.HK, 3899 HK) – $2.1B market cap and $4.4M ADV – Technicals: The stock is attempting to break out
of a stage-one flat base. Pivot range of HKD 8.3–8.7. Solid fundamental profile with an EPS Rank 71, Composite Rating of 93, SMR
Rating of B with accelerating EPS growth estimates for FY24 and FY25.
Global Sector Strategy
The iShares Global ex-U.S. benchmark ETF (ACWX) made a new 52-week high last week, ahead of the U.S. market, after also having held up slightly better in the recent pullback. Although still very short term, it is the first time since the 2022 lows where the global basket outperformed the U.S. market as a new potential rally began. As we can see below (green line on bottom of the chart), the relative strength line versus the S&P 500 is now about three months off its lows from early February.
O’Neil Energy/Material Weekly
CGN Mining (VBTE.HK) – $2.2B market cap – Technicals: The stock broke out of a consolidation base on above average volume into all-time highs. Look for a low volume pullback into the pivot range of HKD 2.12–2.23 for an alternate entry. Fundamental profile: EPS Rank 99, Composite Rating of 99, and the best possible SMR Rating of A. Double-digit earnings growth estimates for FY24 and FY25.
Global Sector Strategy
In the post-WW2 era, the market has seen the phrase “Sell in May and Go Away” carry merit. Since 1950, the Dow Industrial Average has gained an average of 7.7% in the November to April periods versus 0.7% on average in the May to October period. It has also held true that the third year of the presidential cycle has by far the best average (*November-April counts as whichever year April is in, i.e.: November 2022-April 2023 is counted as 2023).
O’Neil Energy/Material Weekly
Chambal Fertilisers and Chemicals (CHB.IN) – $2B market cap and $10M ADV – Technicals: The stock is breaking out of a stagetwo consolidation base on above average volume. Pivot range of INR 403–423. Moderate fundamental profile: EPS Rank 80,
Composite Rating of 77, SMR Rating of C, and double-digit EPS growth estimates for FY25. Excellent technical profile: RS line is near
its 52-week high. RS Rating improved to 67 from 47 over the past six weeks. High Up/Down Volume ratio of 2.6 and the best-possible
Acc/Dist Rating of A+ denote money inflow.
O’Neil Energy/Material Weekly
PetronetLNG (NET.IN) – $5.5B market cap and $26.4M ADV – is a leading liquified natural gas (LNG) company in India and engages in the
import (mainly from ExxonMobil and QatarEnergy), regasification, and distribution of LNG. Its promoters hold 50% stake in the company, and
includes leading state-owned oil and gas players like GAIL (GAI.IN), ONGC (ONG.IN), IOCL (IO.IN), and BPCL (BHP.IN). Technicals: The stock
broke out of a stage-one flat base on above average volume into all-time highs. Excellent technical profile: RS line is approaching 52-week highs
with a RS Rating of 66
Global Sector Strategy
The global market uptrend is under pressure for the first time since early-to-mid-January when the Vanguard Total World Stock benchmark (VT) fell 3% to near its 50- DMA. The 50-DMA held in that case and the index was back to new highs just four days after hitting lows. This time, the 50-DMA did not hold and the VT index is below for the first time since early-November. We will be looking for a quick snapback and retake of the 50-DMA and 21-DMA as another risk-on signal. For now, however, we are proceeding with increased caution.
O’Neil Energy/Material Weekly
JSW Steel (JVS.IN) – $26B market cap – is the largest steel producer in India with a domestic capacity of 28.2 MTPA. Q3 FY24 domestic sales
by end markets: construction & infra, 37%; retail, 33%; industrial, 16%; auto, 14%. Technicals: The stock is forming the right side of a stage-one
cup base
