• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Value Stocks Continued Strength Might Depend On One Area Of Transports
Stock

Value Stocks Continued Strength Might Depend On One Area Of Transports

by January 26, 2024
by January 26, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

I know all the talk continues to surround technology stocks (XLK), particularly semiconductors ($DJUSSC) and software ($DJUSSW). And why wouldn’t it? These groups have been absolutely on fire since the end of the 2022 cyclical bear market. Rates remain low and many of these companies are seeing double digit profit growth. As I’ve said often, this is NIRVANA for growth stocks. But there comes a time, if we use perspective, that these stocks simply get ahead of themselves in terms of valuations. I don’t believe that these areas will simply fall apart as conditions remain conducive for further growth. The economy remains resilient (think soft landing), however, and other areas are showing improvement and strong EPS growth. Bull markets are known for periodic rotation to keep things humming along, so ruling out value areas would be a mistake in my mind.

Financials

Many banks ($DJUSBK) are posting EPS ahead of expectations and the group looks better technically than it has in more than 2 years. As an example, let’s check out the weekly chart of regional banks (KRE):

The weekly PPO has turned higher and bullish momentum appears to be accelerating. After significant deterioration in relative strength in March and April, we’ve seen the KRE trend higher in terms of its relative performance vs. the benchmark S&P 500.

As the Fed lowers the fed funds rate in 2024, we’ll see a reversing of the inverted yield curve. No area of the market is hit harder by an inverted yield curve than banks. The reversal will provide tailwinds for the group and I believe those tailwinds are already being felt.

On Monday, I’m featuring a financial stock that reported EPS well above its consensus estimate and appears poised for much further price appreciation in 2024. It pays a very nice dividend, so it’s likely to be a stock that satisfies investors looking for both capital appreciation AND income. To register for our FREE EB Digest newsletter, simply CLICK HERE to provide your name and email address. There’s no credit card required and you can unsubscribe at any time.

Industrials

While financials, and particularly banks, have shown steady improvement in the second half of 2023 and into 2024, many areas of industrials continue to struggle. One key area will be transportation stocks ($TRAN). The TRAN just hit significant long-term relative support as you can see here:

That relative strength line just hit major relative support and is beginning to turn higher. If it’s going to keep pushing higher, then a critical area to watch is railroads ($DJUSRR). I think they could hold the key for all of transportation in 2024. The chart below shows that railroads were strengthening in Q4, but weakened on a relative basis as the group consolidated in a potential cup with handle pattern. Should this break to the upside, I see the DJUSRR providing renewed leadership and allowing transportation to push much higher in 2024. Check out railroads:

Railroads are testing the lower channel line in its relative uptrend channel (red circle). It’s typical for stocks or industry groups to lose relative strength while they consolidate in an uptrending market. The cause is rotation as traders await another breakout to return to the group. Should railroads breakout above 3425 or so, I’d look for it to be the catalyst to further strength in transports. Ultimately, this would lead to relative strength in the industrials sector.

Happy trading!

Tom

You Might Also Like
  • Will Rising Oil Prices Smack the S&P 500?
  • January: NASDAQ Has the Best Odds of Gains, BUT…
  • My Downside Targets for the S&P 500
  • Bull or Bear Market? A StockCharts Member Special
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Several senior House Republicans still silent on Trump 2024 amid growing pressure for party unity
next post
IBM Stock Shatters Expectations, Hitting a New All-Time High: A Buying Opportunity?

You may also like

The Ord Oracle December 11, 2023

December 12, 2023

Here’s a Scary Scenario for You: S&P 500 Downside to...

October 4, 2023

How the S&P 500 Reaches 6500 By March 2025

January 18, 2025

Is Inflation Permanently “Dissed”?

July 14, 2023

MEM TV: The Easy Way to Uncover Stocks Poised to...

January 13, 2024

Week Ahead: NIFTY Stays In Technically Challanging Situation; Sector Rotation...

May 24, 2025

Does Japan’s Bullish Resurgence Have Staying Power?

July 7, 2023

MEM TV: Small Cap STOCKS SHINE! 4 Names to Play...

March 30, 2024

Expedia (EXPE) Taking The Road Less Traveled

November 19, 2023

Monthly Chart Points to Much Higher Oil Prices Coming

October 11, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Harness The Strength of Power Gauge...

    October 31, 2023

    Sector Spotlight: S&P 500 – Consumer...

    November 21, 2023

    Five Key Market Ratios Every Investor...

    January 22, 2025
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here