Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Stocks

Value Stocks Continued Strength Might Depend On One Area Of Transports

by January 26, 2024
January 26, 2024
Value Stocks Continued Strength Might Depend On One Area Of Transports

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

0
FacebookTwitterGoogle +Pinterest
previous post
Secrets of Success: Susie Stubbs, Founder of Totter + Tumble
next post
Taiwan Takes Step in Right Direction with Longer Conscription, but Challenges Remain

You may also like

Ready To Level Up Your Options Trading?

April 30, 2025

Boeing: Taking Flight Amid Cloudy Conditions

February 16, 2023

S&P 4300 by End of February?

January 13, 2024

Master the Market: Navigating Up Days and Down...

December 5, 2024

Stock Market Today: Are Big Tech Growth Stocks...

September 11, 2024

Drought in Key Regions for Major U.S. Crops

April 10, 2023

Viewer Questions: How Does the Fed Manipulate the...

January 19, 2024

Sector Spotlight: Stocks Rally, But Monthly Trend Remains...

November 1, 2022

DP Trading Room: DP Indicators Called It!

August 22, 2022

Return of the REITs?

January 13, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

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

    Recent Posts

    • CDC Director Susan Monarez refuses to be fired as other officials call it quits

      August 28, 2025
    • Bill Gates met with Trump to talk ‘importance of US global health programs and health research’: spox

      August 28, 2025
    • Trump asks SCOTUS to uphold freeze on billions in USAID payments

      August 27, 2025
    • Three Years of Sounding the Debt Alarm at Cato and on the Debt Dispatch

      August 27, 2025
    • Trump Administration Rightly Attacks EU Tech Regulations but Tariffs and Censorship at Home Harm Americans 

      August 27, 2025
    • White House demands all Gaza hostages return home ‘this week’ amid stalled talks

      August 27, 2025

    Categories

    • Business (8,897)
    • Investing (2,246)
    • Politics (16,503)
    • Stocks (3,228)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.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 © 2025 futureretirementsuccess.com | All Rights Reserved