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?
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.