Aerospace & Defense Sector Overview

I've put together a video covering the Aerospace & Defense Sector and a dozen of the individual components with charts that stood out to me.  As a lot has happened in the markets over the last few weeks that has damped the longer-term bearish case and strengthened the bullish case, a dilemma has developed lately which is a very obscure, or more precise, a conflicting technical picture.  From a longer-term perspective (weekly charts), I continue to believe that the technicals are bearish.  Nearly all major US indices are at or near key multi-year resistance while most or all have recently broken below their primary bull market uptrend lines, all of which had put in long-term negative divergences at their recent highs.  Volume has been anemic for months now and most of the market leaders of the aging bull market that began nearly 4 yrs ago, such as AAPL, CMG, etc... have clearly broken down and are well off their highs.  On the flip-side, the price action of late has been undeniably bullish and although this latest thrust up over the last couple months has not been confirmed by volume, the internals have been healthy.  So basically a mixed bag or conflicting views depending on whether one looks at the market on a longer-term or short-term time frame.

For those who have followed for most or all of 2012, you will recall that regardless of my bias on the market at the time, I kept a pretty even balance between long and short trade ideas, both of which did very well overall.  However, heading into the end of the year, I was guilty of skewing the trade ideas towards my bearish bias and adding a disproportionate amount of short trade ideas vs. long trades.  Although I continue to maintain my longer-term overall bearish bias, I am making an effort to bring more balance back to the trade ideas by finding some new long setups.  I also know from experience that bearish prognostications don't sell memberships (not that I'm charging yet anyway as I'm still working on building out the finishing touches on the site).  However, one thing that I will never do, simply because it's not in my nature, is to cater my analysis towards what the "masses" want to hear vs. what my true interpretation of the market is.  There are times where I have and will continue to state that I have a low degree of confidence or don't have a "good read" on the market in which case the frequency of my posts and trade ideas will be reduced.  With that being said, I think there are a lot of interesting developments in the market to discuss lately and I do plan on continuing to update the market analysis posts.  I'm also looking for objective trade ideas, particularly some longs to replenish those trade ideas as many of the long trades have hit their final targets over the last month or so.

That brings me to this video.  Although I will continue to shift through the charts, sector by sector, then stock by stock to find the most attractive (good R/R) setups, I will not force any trade ideas.  At first glance, the Aerospace & Defense Sector looked very bullish to me as it has recently made a solid breakout to new multi-year highs above well defined resistance.   Therefore, I drilled down further into the charts, expecting to find a plethora of new long-side trade ideas.  Although I did find quite a few long candidates, I find a lot of the same contradictions that I find in the broad markets right now:  Very bullish looking daily charts against a backdrop of potentially bearish longer-term (weekly charts).  I encourage those who are currently bullish as well as those current bearish to view this video as nearly all of these trade ideas are at key inflection points such as weekly and daily resistance levels.  For those bullish, particularly longer-term investors/traders, these could provide some excellent for long-side trades in 2013 assuming the market continues higher.  For those looking for some short-side trade ideas, many of these stocks are also at or near well defined support levels, which if broken, could provide a short entry (or an objective stop for longs already in these names).  The stocks covered in this video, in order as discussed, are: RGR, SWHC, COL, TASR, FLIR, ATK, TDY, HEIA, HON, GD, HXL, LLL



2013-01-09T12:41:31+00:00Jan 9, 2013 11:57am|Categories: Equity Market Analysis|Tags: , , , , , , , , , , , |Comments Off on Aerospace & Defense Sector Overview