Which shares are making new highs?
Eoin Treacy's view The
vast majority of stock markets have rallied sharply since earlier this month.
A number posted failed downside breaks a few weeks ago and as of today are breaking
back up into their respective overhead trading ranges. Against such a background
I thought it might be instructive to identify shares hitting new highs. At The
Chart Seminar, we say that leaders tend to lead for reason and lead in both
directions. Therefore ascertaining which shares and sectors are leading gives
us an indication of which sectors bullish sentiment will focus on and will in
future offer an indication of when a trend is maturing.
I performed
a number of Chart Library High/Low filters this morning for the USA, UK, Europe,
Australia, Canada, South Africa, Asia and Japan. This table
of 136 results ranks companies making at least new 2-year highs by country,
then by industry subgroup. Despite a similar sample space to the UK and Europe,
the USA has by far the largest number of companies making new highs; more than
a third of the total. Unsurprisingly, shares with defensive characteristics
such as electric utilities, tobacco, REITs and insurance companies are reasonably
well represented.
US healthcare
companies continue to be among some of the best absolute and relative performers.
Intuitive Surgical found support in the
region of the 200-day MA in late August and hit a new all time high last week.
Biogen mostly ranged from 2000 until
March 2011 when it broke out. It consolidated above $80
for the last few months and hit a new high this week. A sustained move below
$80 would be required to begin to question medium-term upside potential. Celgene
has been ranging above $50 for much of the last 18-months and broke upwards
two weeks ago. A sustained move below $60 would be required to question medium=-term
scope for additional upside.
Alexion
Pharmaceuticals also showed up in a review of the USA's leading shares on
September
7th. The share is now overextended relative to the MA and the risk of a
reversion towards the mean has increased.
Bristol-Myers
Squibb also appeared in the September review. The share
has been in a base formation for much of the last decade but hit a new 9-year
high two weeks ago. It has so far held the majority of the advance and a sustained
move below $28 would be required to challenge the base formation completion
hypothesis.
I last reviewed discount retailers such as Costco and Dollar Tree Stores as
well as a number of luxury US brands on October
12th. A number of these shares also appeared in today's list of new highs
and my chart comments remain largely unchanged. McDonalds,
Starbucks and Chipotle
Mexican Grill also continue to hit new highs.
In Europe,
fashion brand Inditex (listed in Spain)
shares the commonality of similar US companies. It has been consolidating mostly
above the 2007 peak since late last year and broke upwards to new highs three
weeks ago. A sustained move below the MA, currently near €60 would be required
to question medium-term scope for additional upside.
Netherlands
listed Vopak NA provides bulk storage
facilities for the oil industry. The share lost momentum from late last year
and has been ranging mostly above €30 since. It rebounded emphatically
from the early August low and hit a new high this week. A sustained move below
€35 would be required to question medium-term scope for additional upside.
In the
UK, Next Plc has a similar pattern to
Inditex above. In the healthcare sector, GlaxoSmithKline,
a dividend aristocrat (5.43%), has posted a progression of higher reaction lows
over the last two years and hit a new three-year high last week. Rolls
Royce is also worthy of mention. The share spent much of the last year ranging
mostly above 550p. It broke upwards emphatically three weeks ago and a sustained
move below 650p would be required to check current scope for additional upside.
In the
drinks sector Diageo, a dividend aristocrat
(3.42%), rallied impressively from the August lows to hit a new high last week.
SAB Miller has not yet hit a new high
but looks more likely than not to achieve that feat.
In Canada
and Australia there are a number of gold miners hitting new highs such as Silver
Quest Resources and Regis Resources
respectively. A number of Canadian pipeline companies have also returned to
positions of absolute and relative outperformance. Enbridge
(2.68%), Pembina Pipeline Income Fund
(5.9%), TransCanada (3.8%) and AltaGas
(4.59%) share a relatively similar pattern.
In conclusion,
the pharmaceutical sector is a notable outperformer in the USA where a number
of shares are completing lengthy base formations. Companies offering affordable
products also appear to be thriving as are a considerable number of fashion
and food retailers. A common theme of shares offering an attractive yield and/or
exposure to growth of the global middle class is also evident.