SMO Exclusive: Strength Report Industry Group 1 2024-12-31 Weakened -0.2 to 6.0 Strength Score

Brian Degracia

31 Dec 2024 • 7 min read

Mixed week ending 12/31/24. Four of 6 Energy sub-industries strengthened, while Materials & Construction weakened one strength level. Note in the graphic that it is possible for an industry to NOT change strength rating yet still "strengthen" or "weaken" for the week. The reason for this is that underneath the surface there can be movement that is directional but not considered material enough to change the strength rating. Taken in the aggregate over the sub-industries that make up industries and then sectors, this can provide helpful insight into the underlying currents at each level.

Overview

This post consists of the following sections:

I. KEY BACKGROUND INFORMATION
II. TECHNOLOGY SECTOR DETAILED ANALYSIS

SECTION I: KEY BACKGROUND INFORMATION

Sector Weekly Summary

Industry Group 1 weakened by 0.2 points to a 6.0 composite score (6Weak) this week as one of five industries fell one strength rating level.

All industries are at 6Weak, with four unchanged at that level for the week (Automotive, Energy, Metals & Mining, and Transportation) while Materials & Construction fell one strength level.

Difference This vs. ETFs Analysis

Note this analysis is the same as that used for the SPDR ETFs published every Tuesday and Friday (here is today's report dated December 31, 2024) 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.

Of the five industries in this grouping, there is only one matching ETF which is the Energy ETF (symbol XLE). This ETF has a 6Weak rating, just like the Energy industry in this analysis, reflecting that the 22 large cap stocks that comprise the ETF have a matching strength rating to the 130 Energy industry stocks.

December 31, 2024 strength ratings for the 11 SPDR ETFs show the XLE/Energy ETF at 6Weak, the best performing (relatively speaking) ETF at unchanged. All other ETFs weakened.

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. One quick way to discern this is to look at the differing market levels in terms of headwinds and tailwinds as noted below.

Current Market Environment: TAILWIND

MARKET: The Market Strength Score changed to negative ("risk on") as of Friday, December 27 = TAILWIND

Current Industry/Sub-Industry Environment

This industry grouping is not homogenous as are Technology and Financial. Therefore, there is no relevant "Sector" headwind and tailwind for these industry groups. The individual industry head/tailwinds are noted below. If interested in positions in these industries, it is better to go where there is strength and strengthening - as reflected by price. This Stock Market Organizer methodology explicitly reveals where there is strength/strengthening.

Automotive was unchanged at 6Weak = headwind
Energy was unchanged at 6Weak = headwind
Materials and Construction (including Homebuilders) weakened one strength rating to 6Weak = headwind
Metals & Mining was unchanged at 6Weak = headwind
Transportation was unchanged at 6Weak = headwind

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.

This methodology measures what IS, acts accordingly based on objectively set rules, and never attempts to make predictions. As the market environment facts change based on systematic and repeatable measurement, then so do the appropriate actions.

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. Why? Because the market does not have to be so complicated.

SECTION II: FINANCIAL SECTOR DETAILED ANALYSIS

Section Table of Contents

Introduction - Industry Components
INDUSTRY 1-Week Strengthening, Positive/Negative % Stocks
INDUSTRY 10-Week Strengthening
SUB-INDUSTRY 10-Week Strengthening
STOCKS Outliers: Strongest/Weakest Rated
STOCKS Outliers: 1-Week % Change
STOCKS Outliers: 5-Year Highs/Lows

1. Introduction - Industry Components

Automotive

Largest of 4 sub-industries (54 stocks, average 14):

Auto Parts (24 stocks)
Auto Manufacturers - Major (14 stocks)
Recreational Vehicles (11 stocks)

Top 10 Market Caps:
TSLA/Tesla Inc, TM/Toyota Motor Corporation ADS, RACE/Ferrari NV, GM/General Motors Company, PCAR/Paccar Inc, JCI/Johnson Controls Inc, HMC/Honda Motor Co. Ltd. ADS, F/Ford Motor Co, STLA/Stellantis N.V., LI/Li Auto Inc

Energy

Largest of 6 sub-industries (130 stocks, average 22):

Independent Oil & Gas (43 stocks)
Oil & Gas Equipment & Services (27 stocks)
Oil & Gas Pipelines (25 stocks)
Oil & Gas Refining & Marketing (18 stocks)
Major Integrated Oil & Gas (14 stocks)

Top 10 Market Caps:
XOM/Exxon Mobil Corporation, CVX/Chevron Corp, TTE/TotalEnergies SE, COP/ConocoPhillips, PBR/Petroleo Brasileiro S.A., BP/BP P.L.C., ENB/Enbridge Inc., EQNR/Equinor ASA, CNQ/Canadian Natural Res Ltd, EOG/Eog Resources Inc

Materials & Construction

Largest of 8 sub-industries (75 stocks, average 10):

General Building Materials (23 stocks)
Residential Construction (15 stocks)
Heavy Construction (12 stocks)
Waste Management (10 stocks)

Top 10 Market Caps:
WM/Waste Management Inc, CARR/Carrier Global Corporation, RSG/Republic Services Inc, DHI/D.R. Horton Inc, LEN/Lennar Corp Cl A, PWR/Quanta Services Inc, WCN/Waste Connections Inc, FAST/Fastenal Company, MLM/Martin Marietta Materials Inc, VMC/Vulcan Materials Cop

Metals & Mining

Largest of 7 sub-industries (62 stocks, average 9):

Industrial Metals & Minerals (19 stocks)
Gold (13 stocks)
Steel & Iron (11 stocks)
Silver (10 stocks)

Top 10 Market Caps:
SCCO/Southern Copper Corp, FCX/Freeport-McMoran Inc, NEM/Newmont Corporation, AEM/Agnico Eagle Mines Ltd, NUE/Nucor Corp, GOLD/Barrick Gold Corp, WPM/Wheaton Precious Metals Corp, FNV/Franco Nevada Corp, TECK/Teck Resources Limited, CCJ/Cameco Corp

Transportation

Largest of 7 sub-industries (73 stocks, average 10):

Shipping (28 stocks)
Trucking (14 stocks)
Air Delivery & Freight Service (11 stocks)

Top 10 Market Caps:
UNP/Union Pacific Corp, UPS/United Parcel Service Inc, CP/Canadian Pacific Railway Ltd, CNI/Canadian Natl Railway, FDX/Fedex Corp, CSX/CSX Corp, NSC/Norfolk Southern Corp, ODFL/Old Dominion Freight Lines Inc, DAL/Delta Air Lines Inc, WAB/Westinghouse Air Brake Technologies Corp

2. INDUSTRY 1-Week Strengthening

Overview

What: A closer 1-week look at industry and sub-industry strengthening
Why: a multi-month rally begins with one up week. Meaningful moves last and can last longer than expected.

Positive/Negative % Stocks

3. INDUSTRY 10-Week Strengthening

Overview

What: A comparative 10-week look at industry strengthening
Why: clearly and quickly understand where there is strengthening and weakening over a relevant time frame

4. SUB-INDUSTRY 10-Week Strengthening

Overview

What: recent week-by-week strength changes for the industry and its sub-industries
Why: objective measurement of strengthening and weakening enabling comparison within and across industries and sub-industries

This key provides a guide for how to read the charts in this section.