Hot Sectors, Or Tired Fed?

I’m trying to find a ‘theme’ to go with, and so far, it isn’t very satisfying. Even BRKA Birkshire Hathaway has a down chart.

So it was “back to basics” time. Look at hot sectors. Look at alpha and change of alpha (alpha is tendency to rise, beta is tendency to move when the market moves or kind of a volatility quotient… there are other Greek letters too…)

The lists of most alpha (from Racing Stocks link up top) were not particularly impressive. A few showed spectacular percent gains for the month or quarter. Looking into them, the ‘big movers’ tended to be very thinly traded penny stocks that had a bounce up from “dead near a couple of pennies” to “sort of near a dime” and can just as quickly become “no value at all”. Frankly, that Marketwatch included them in the calculation at all was a bit of a shock. They ought to have a cut off at $1 at least, preferably $5, as anything below that is not doing the right things. (Buybacks, reverse splits, M&A, something…)

So I decided to just look at the list of the hottest stocks and what had the most Alpha. What sectors are ‘heated up’ the most?

From: http://www.barchart.com/stocks/sectors/sic/

Sectoring by SIC CodesFri, Nov 6th, 2015

Ranks stock SIC groups by the average weighted alpha of the stocks contained within the SIC group.

Export DataFlipCharts
By Weighted Alpha
Weighted Alpha 	Industry Name 	Change 	Stocks 	Links
+15.35 	SIC-60 Depository Institutions 	+2.16 	453 	Get Quote Get Chart Get Opinion
+13.76 	SIC-78 Motion Pictures 	+3.31 	14 	Get Quote Get Chart Get Opinion
+13.15 	SIC-87 Engineering, Accounting, Research, Managemen 	-1.67 	67 	Get Quote Get Chart Get Opinion
+12.70 	SIC-24 Lumber And Wood Products, Except Furniture 	+0.89 	13 	Get Quote Get Chart Get Opinion
+12.37 	SIC-25 Furniture And Fixtures 	-0.56 	19 	Get Quote Get Chart Get Opinion
+12.09 	SIC-51 Wholesale Trade-non-durable Goods 	+0.21 	53 	Get Quote Get Chart Get Opinion
+11.90 	SIC-01 Agricultural Production Crops 	+10.54 	8 	Get Quote Get Chart Get Opinion
+9.61 	SIC-45 Transportation By Air 	+2.04 	31 	Get Quote Get Chart Get Opinion
+9.60 	SIC-55 Automotive Dealers And Gasoline Service Stat 	-0.16 	23 	Get Quote Get Chart Get Opinion
+8.18 	SIC-63 Insurance Carriers 	+1.43 	133 	Get Quote Get Chart Get Opinion
+7.81 	SIC-70 Hotels, Rooming Houses, Camps, And Other Lod 	+0.46 	33 	Get Quote Get Chart Get Opinion
+7.20 	SIC-52 Building Materials, Hardware, Garden Supply, 	+2.91 	9 	Get Quote Get Chart Get Opinion
+5.56 	SIC-22 Textile Mill Products 	-1.99 	8 	Get Quote Get Chart Get Opinion
+4.93 	SIC-75 Automotive Repair, Services, And Parking 	+2.12 	7 	Get Quote Get Chart Get Opinion
+3.75 	SIC-21 Tobacco Products 	-1.92 	6 	Get Quote Get Chart Get Opinion
+2.41 	SIC-73 Business Services 	+1.87 	465 	Get Quote Get Chart Get Opinion
+1.85 	SIC-20 Food And Kindred Products 	-2.26 	81 	Get Quote Get Chart Get Opinion
+0.79 	SIC-79 Amusement And Recreation Services 	-0.27 	21 	Get Quote Get Chart Get Opinion
+0.30 	SIC-30 Rubber And Miscellaneous Plastics Products 	+1.58 	28 	Get Quote Get Chart Get Opinion
+0.19 	SIC-32 Stone, Clay, Glass, And Concrete Products 	-0.48 	19 	Get Quote Get Chart Get Opinion
+0.18 	SIC-72 Personal Services 	+1.31 	13 	Get Quote Get Chart Get Opinion
-0.20 	SIC-48 Communications 	+0.08 	136 	Get Quote Get Chart Get Opinion
-1.93 	SIC-36 Electronic And Other Electrical Equipment An 	+1.33 	294 	Get Quote Get Chart Get Opinion
-2.22 	SIC-57 Home Furniture, Furnishings, And Equipment S 	-0.40 	13 	Get Quote Get Chart Get Opinion

I’ve left a couple of ‘negative alpha’ sectors on the bottom, there are more on the actual listing. I just wanted it to be clear that ALL the positive sectors on on that list. I’d also ignore just about anything under a +5 alpha or so. Like “SIC-20 Food And Kindred Products” at a +1.85. Sorry, but the grocery store business is pretty darned cutthroat and not going to post outsized growth.

So what’s at the top? Banks.

We also find Insurance in line 10 at a +8 rank.

OK, those are driven by The Fed and Free Money.
As The Fed is signaling that’s likely to end soon, not so interested.

What else is on the list? Cars, gas stations, car repair, transportation / airlines, wood – both furniture and non-furniture, ag production, motion pictures, hotels, home & garden.

Not a large growth potential in ‘house and garden’ nor in ag. We’ve pretty much got the farms and processing built out. Movies and air travel? Other than a Home For The Holidays bump, “Never OWN an Airline”… Trade yes, own no. Horrible business.

We have Wholesale non-Durable – so buying crap from China. With China hitting the skids I’m not interested in that one.

Much of the list is consumption oriented. Tobacco and textiles. Movies. Only one looks really ‘make a product’ oriented: SIC-87 Engineering, Accounting, Research, Management. Clicking through it, you get:

+77.20 	SIC-8734 Services-Testing Laboratories 	+11.50 	1 	Get Quote Get Chart Get Opinion
+33.18 	SIC-8731 Services-Commercial Physical & Biological Re 	-9.83 	25 	Get Quote Get Chart Get Opinion
+7.68 	SIC-8742 Services-Management Consulting Services 	+3.92 	20 	Get Quote Get Chart Get Opinion
+7.50 	SIC-8744 Services-Facilities Support Management Servi 	+1.80 	1 	Get Quote Get Chart Get Opinion
+2.25 	SIC-8741 Services-Management Services 	+4.33 	6 	Get Quote Get Chart Get Opinion
-14.03 	SIC-8700 Services-Engineering, Accounting, Research, 	-0.43 	3 	Get Quote Get Chart Get Opinion
-14.36 	SIC-8711 Services-Engineering Services 	+0.61 	11 	Get Quote Get Chart Get Opinion

Most of the bump from Testing Labs. Clicking through that you get one company, Neogenomics Inc. that was dead money at $20 to mid October, then jumped up to $65-70 in two weeks. Some kind of news driven event. Maybe worth investigating as a trade candidate, based on hot news, but hardly a ‘theme’.

So I’ve got more digging around to do. But as of right now, it’s the least interesting sectors that still have positive Alpha. Not a very good sign at all.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Economics - Trading - and Money and tagged , , , . Bookmark the permalink.

4 Responses to Hot Sectors, Or Tired Fed?

  1. p.g.sharrow says:

    Yes I am afraid Warren Buffet has run out of Aces and now resorts to Crony Capitalism to feed Berkshire Hathaway. Even that gambit is about run out of steam. Present M&A is only fueled by “Free” money that will end soon. Just too many “Smart Money” people taking a cut out of a decreasing pot of wealth creation. Wealth creators are stymied at every turn by the requirements from Regulators that just don’t understand. actual wealth creation. The accumulation of wealth is not the same as creation of wealth. Thieves accumulate wealth that others have created. When was the last time Berkshire actually paid out the wealth accumulated to their investors? M&A does not create wealth and it’s synergy just means middle and upper management are laid off to pad the bottom line. Then assets are removed and sold off. Debit is added to raise more funds. Then the managers that are left are told sink or swim, Cut all costs or bankruptcy. Wealth Accumulation not wealth creation. Destructive Capitalism at work. The “Harvesting” of wealth unearned…pg

  2. Larry Ledwick says:

    Well this might be an option to invest in a “growth” industry for the foreseeable future.
    Somebody is going to have to pay for all these expensive bits and pieces and given the long lead time to ramp up, will likely be pushing out new inventory for a couple years.

    http://fortune.com/2015/11/11/gulf-allies-precision-weapons-running-low/

  3. E.M.Smith says:

    Hmmmm.. RTN Raytheon up nicely… Maybe you are on to something…

    http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=rtn&x=32&y=15&time=8&startdate=1%2F4%2F1999&enddate=11%2F9%2F2015&freq=1&compidx=aaaaa%3A0&comptemptext=gld+spy+tlt+djta&comp=gld+spy+tlt+djta&ma=4&maval=23&uf=0&lf=268435456&lf2=4&lf3=1024&type=4&style=320&size=3&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15

    Sector 3 month up / down list:
    http://bigcharts.marketwatch.com/industry/bigcharts-com/focus.asp?symb=WSJIXUSDFN

    Best Performing Stocks Symbol 	Company Name 	Percent Change 
    WSGI 	World Surveillance Group Inc.	62.50% 	
    BZC  	Breeze-Eastern Corp.	42.80% 	
    PBSOQ 	Point Blank Solutions Inc.	41.67% 	
    VSEC 	VSE Corp.	31.42% 	
    BFDI 	Brekford Corp.	22.64% 	
    XNNH 	Xenonics Holdings Inc.	20.00% 	
    EGL  	Engility Holdings Inc.	18.27% 	
    HII    	Huntington Ingalls Industries Inc.	8.90% 	
    RTN 	Raytheon Co.	8.62% 	
    CUB 	Cubic Corp.	6.32% 	
    
    Worst Performing Stocks Symbol 	Company Name 	Percent Change 
    HNIN 	Horne International Inc. Corp.	-60.00% 	
    RADA 	Rada Electronic Industries Ltd.	-39.62% 	
    LLLI  	Lamperd Less Lethal Inc.	-38.34% 	
    AJRD 	Aerojet Rocketdyne Holdings Inc.	-27.39% 	
    TASR 	TASER International Inc.	-19.10% 	
    RGR 	Sturm Ruger & Co.	-18.72% 	
    DSUS 	Drone Services USA Inc.	-18.71% 	
    GLEC 	Global Ecology Corp.	-16.67% 	
    FLIR 	Flir Systems Inc.	-12.94% 	
    IMSC 	Implant Sciences Corp.	-12.17% 	
    

    Kind of wondering what Implant Sciences Corp does that is in the defense area… Also “World Surveillance Group” is a bit, um, interesting…

    The up / down ratio is about equal, so some stock picking needed.

    Still, it’s got some things to pick over that are going up.

    UPDATE:

    Whatever World Surveillance does, they don’t do it very well. Stock opened today at 1/10 ¢ and traded 48,000 shares, so $48 worth… They really need to screen out that kind of crap stock or at least have a setting to do so.

  4. Larry Ledwick says:

    Looks like Implant Sciences Corp is a critical vendor for some very useful services from a google search.
    11, 2015 /PRNewswire/ — Implant Sciences Corporation (OTCQB: IMSC), a leading manufacturer of explosives trace detection (ETD) and drugs trace detection …

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