Date: April 22, 2019

Sectors Strengthening. Buy the Pullback

First, I want to apologize for my inconsistent posting lately. We have been trying to migrate to a new and upgraded WordPress server at Godaddy and that has taken a lot longer than I thought. At first I didn’t realize that I couldn’t post new content until everything was migrated over and then I had to have Godaddy migrate everything over all over again. So, I am in limbo. Sorry about that.

Thankfully, the markets have been very quiet lately with a mild drift to the upside or downside for the major indices. Regardless, as I have written about all year, fresh all-time highs remain my forecast and I am not ruling out Dow 30,000 in the next 11 months.

Semis and discretionary remain the power sectors with the former going somewhat parabolic on the news of Qualcomm finally settling its longstanding feud with Apple over patent infringement. You can see the chart of the semis below. As I wrote about earlier this month when the transports were “percolating”, this key sector has really kicked it up a notch and further strength could really provide fuel for stocks to move higher into summer. Regarding the banks, they have been so beaten down and expectations are so low, they are interesting here, but until price action is more compelling, I will just continue to watch.

You may have noticed that the healthcare sector has been decimated lately as Bernie Sanders’ poll numbers have risen and talks of Medicare for all have been all over the news. While this issue isn’t going away anytime soon, the sector is presenting itself with a short-term trading opportunity right here and now. When I did a deep dive into the stocks, there were certainly a few I liked better than others and I will try to carve out some to discuss later this week.

The stock market bulls continue to do absolutely nothing wrong. Stocks look a tad tired, but that’s about it. Mild and modest pullbacks can be expected at any time and for any reason. However, until proven otherwise, all weakness is a buying opportunity.


Paul Schatz, President, Heritage Capital