SMO Exclusive: Industry Strength Report 2023-12-01, Weighted Average +0.5 to 4.7 Strength Score (Strong-Average)
This 10-week Industry Strength Report provides market clarity and context.
- 13 of 29 industries strengthened and 0 weakened
- 4.7 Average Strength (scale 1-9, Strongest = 1, between 5/Average and 4/Strong)
- 1-week +0.5 strengthening
- 10 weeks ago 6.0 Average Strength (1.3 points weaker)
- Market now above Average strength, still room to run
These objective measurements reflect calculations that enforce discipline and ensure an active focus on all checklist items key to my process, throughout all phases of the market cycle –without bias, emotions, feelings, interpretations, judgments, or opinions.
(12/01/23 top-down look is available here.)
Statistics
🔹 13 industries strengthened
1. Banking
2. Financial Services
3, Real Estate
4. Computer Software & Services
5. Telecommunications
6. Consumer Durables
7. Materials & Construction
8. Metals & Mining
9. Transportation
10. Diversified Services
11. Health Services
12. Leisure
13. Chemicals
🔹 0 industries weakened
🔹 Strongest industry (Stronger rating, 3rd strongest of 9 levels):
1. Materials & Construction, home of Residential Construction/Homebuilders
🔹 Weakest industries (Weak rating, 6th strongest of 9 levels):
1. Food & Beverage
2. Automotive
3. Media
4. Utilities
5. Drugs
Background
The goal of this?
To objectively and reliably find strengthening and weakening in the U.S. stock market.
Why?
The stronger your stocks, the greener your P&L.
Driving principle?
Market conditions matter - most stocks do what the market does and, when the market strengthens, likely so will your stocks. (Did you know 99 of 100 stocks fell during the Covid shutdown decline? See Market Conditions Matter.)
What does this mean at a practical level?
- In an uptrend, there will be more technical breakouts and price recognition of undervalued stocks.
- In a downtrend, there will be more technical breakdowns and undervalued stocks will become more undervalued.
In turn…
- Know when to be aggressive and conservative (position sizes and stops) and when your favorite set-ups are more likely to work/fail.
REPEATING:
Market conditions matter.
IT REALLY DOESN’T HAVE TO BE SO COMPLICATED.