Asset managers are a big industry within the financial sector. While leaders like Blackstone have been flying for a while, there is a compilation of new setups in the industry group this week. Below find some potential trade ideas.
Jefferies is getting ready to break out to fresh new highs. This week the stock already popped 7% so this one might need a few days to consolidate and then buy a breakout. The stock is setting up nicely. The StockCharts Technical Ranking indicator is moving to fresh new highs so this looks more like a trend change. Notice how it stayed under 50 during the downtrend. The 2-year down trend in relative strength compared to the $SPX is also breaking. Another positive, bullish hint. The weekly full stochastic is also turning up above 50 which looks supportive of these other trend breakouts listed above. On the price chart, we can see the price needs to break above $21. I would like to see it pop up a little bit more, then try to buy it on a pullback. This might be hard to catch if bond yields bottom any time soon. Lots of the financials are setting up like the yields are ready to reverse. I would like to see the momentum shown on the bottom panel break out and go positive. This would be an important change as momentum usually leads price. Notice it has been negative since early 2018. This chart looks great to monitor as it has all of the technical indicators setting up at the same time so this would confirm the breakout on many different indicators.
T Rowe Price
The chart for T Rowe Price looks nice but the chart sits at an important inflection point. I want to see the SCTR break out above 75. We can see when it has stalled just under the top quartile or the top 25% level, the stock reverses quite hard. This is important to see it gain momentum and have money move aggressively in the stock and push the price up to attract more investors. The relative strength compared to the S&P 500 is tepid. I would like to see this accelerate. I would definitely avoid the stock if it starts to break down through the red line shown. One of the indicators I like on the chart is the weekly full stochastic. It bounced off 50 which is typically a bull market trait. As it moves above 80, the indicator can stay in this strong area for a while. If price breaks out above the $110 level, this should also attract more investors as it nears new 52-week highs. If all goes well, the PPO should stay above the red trend line showing rising momentum. Should this fail, I would let the stock move to another owner. The current setup looks bullish on the PPO if the trend can continue. The reason it is bullish is because it is above zero and rising. This positive momentum above zero is usually a nice place to get on board a stock.
Apollo is a mid-cap stock that is breaking out to new highs this week. That is very bullish. The chart has a lot of nice indicators flashing buy, but the number one clue is the fresh new highs. When buyers are willing to pay more for a stock than ever before, there is usually a good reason. With the nice consolidation before the breakout, this stock looks great. The StockCharts Technical Ranking compares it to other midcap stocks and suggests this stock is just getting going. Notice the strong outperformance when the SCTR stayed above 75 from 2016 to 2018. All the other indicators look good and the volume is piling in as this stock breaks out. The next indicator we should see change is new highs in the purple relative strength chart. A breakout there will attract new institutional investors.
Eaton Vance is breaking out to fresh 6-month highs after consolidating in a base in the first half of 2019. The mid-cap SCTR ranking has not moved above 75 yet, but it is getting close. The stock has never spent much time above the 75 level as we can see looking left. While the chart shape looks good, we might be better going with stocks that have the ability to become a top performer on the SCTR. It is this subtle information that can help us find powerful moves. If the stock can push up into the top area, all the other indicators are primed to push in a nice big bull market thrust.
Some of the stocks in this group have been lighting up the profits button in the portfolio. Names like BlackRock, Cohen and Steers, and Ares Capital all have nice charts that are somewhat extended. The nice part about the stocks above is the ability to control risk by setting our stops based on the patterns they are breaking out from. If they fail to break out, we can exit with close stops.