Sector Spin – Internet Communications
By Terry Long December 3rd, 2020
Welcome to the Sector Spin with Terry. In this new video series, I’m sharing with you what I’m watching each week in various Sector industry subgroups.
Monitoring the eleven different sectors in the S&P index, I’ve noticed a new rotation unfolding in the XLC, Communications Sector, following this recent northerly hook formation. As you can see in the table, this week’s price percent change has the XLC at the top of the list. While diving deeper into the various subgroups, I wanted to share with you a particular group that seems to be gaining traction again and one where I believe new leaders are beginning to form.
This week, I’m going to take a look at stocks in the Internet subgroup of the Communications Sector. Looking at this watchlist, I can already see a couple of stocks that are on the move. Jumia Technologies is up nearly 18% this week and Spotify is up nearly 13% on the week with SNAP coming in a close third, up nearly 7%.
Let’s open a sector rotation chart on this group. As you can see, while the XLC has actually been Weakening overall, there is quite a nice group of stocks that have been significantly outperforming the S&P and by the looks of the directions these arrows are pointing, there are further gains to be made.
Zooming in closer to the border between Improving and Leading Quadrants, and with the Benchmark SPX here at the origin, You can see many stocks, including Google establishing a nice northeasterly heading. At this trajectory, I suspect several of these stocks will capture and hold a leadership position over the next several weeks. On the downside, I actually see momentum loss on a group of Chinese Internet plays such as BIDU, IQ, and SINA.
Having a powerful tool such as Optuma to help us drill into the details of Sectors and the Sector Subgroups gives us a key advantage and an ability to be more selective in the stocks which we choose to trade and/or add to our portfolio. Good luck in your trading ventures and be sure to check us out at TradingAnalysis.com.
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