SMO Exclusive: Strength Report Industry Group 1 2024-11-19 Unchanged at 4.3 Strength Score

Summary

Industry Group 1 was unchanged with a 4.3 composite score this week. This group consists of Automotive (TSLA, GM, Ford), Energy, Materials & Construction (Residential Construction/Homebuilders), and Transportation.

Difference This vs. ETFs Analysis

Note this analysis is the same as that used for the SPDR ETFs but the two main differences are:

1. Universe of stocks. The ETFs are the largest capitalization stocks, 500 of them in the 11 sector ETFs. In this analysis, there are approximately 2,700 stocks.
2. Sub-categorization below the market level. The ETF analysis with 500 stocks is limited to sector strengthening and weakening. This analysis with +/-2,700 stocks can be and is segregated into 29 industry groups and in turn 189 sub-industry groups.

There is an Energy ETF (symbol XLE). Per Tuesday's ETF strength analysis, this ETF STRENGTHENED one rating to 4Strong and has been on the move in the past two weeks.

How would I interpret and use this information?

Recognizing that anything can happen at any time and I will never know the reason why until after the fact if ever, I am looking to give myself the best chances of an individual stock going my desired direction by stacking strength going long or stacking weakness going short, depending on strength/strengthening and weakness/weakening at the stock, sub-industry, industry, sector, and market levels.

Following are summary statements regarding the current environment:

• The Market Strength Score is now negative = headwind
• Group 1 was flat, though there were 3 strength rating changes = neutral
• Automotive weakened rating to 6Weak = headwind
  • Along with this weakening of one rating this industry is now below 5Average
  • TSLA crushing it despite the industry weakness
• Energy strengthened rating one level to 4Strong = tailwind
  • 4 of 6 sub-industries strengthened enough to change rating - Independent Oil & Gas, Drilling and Exploration, Pipelines, and Refining & Marketing. Pipelines is the strongest at 3Stronger.
• Materials & Construction weakened rating to 4Strong = headwind
  • Heavy Construction and GCs (separate industries) fell one strength level to 3Stronger
• Metals & Mining and Transportation were both unchanged = neutral
  • Gold did strengthen one level to 4Strong

Final Comments

There is absolutely no way of determining how long this environment will last. All one can do is find an objective way of measuring whether any given environment offers headwinds or tailwinds and then act accordingly based on these measurements.

Details are below shown in a manner not available elsewhere because I created it from scratch to continually answer this question: “Where is there strengthening and weakening in the market at the stock, sub-industry, industry, and sector levels?” Combine this with the top-down Market Strength Score and Sector Risk Gauge to get a key competitive advantage of understanding strength at every level.

1. Introduction

2. Industry 1-Week Strengthening

3. Industry 10-Week Strengthening

4. Sub-Industry 10-Week Strengthening

5. Stocks Outliers: Strongest/Weakest Rated

6. Stocks Outliers: 1-Week % Change

7. Stocks Outliers: 5-Year Highs/Lows