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  • Hi everyone and welcome to investing strategies it's Alissa Coram with

  • Investor's Business Daily from the Nasdaq market site in Times Square with

  • the S&P 500 vying for a break up to new highs will it be able to hold its new my

  • territory fairly strategies is here to provide a technical perspective on the

  • markets action plus we're analyzing the rotation into semiconductor stocks as an

  • improving sector outlook is finally lifting the group back to a position of

  • leadership and gold is consolidating but it's trading at its highest levels in

  • over six years State Street Global Advisors will tell us what's behind the

  • commodities big move in 2019 and what investors should expect from gold in

  • 2020 investing strategies starts now

  • okay let's get started with this week's market insights the S&P 500 is now hitting

  • new all-time highs could the breakout indicate a shift away from the

  • volatility that's defined much of the last several months well joining me now

  • to provide a technical look at the market is Katie Stockton founder and

  • managing partner at Fairlead strategies thanks so much for being here today

  • Katie glad to be here yeah so we're now at new all-time highs for the S&P 500

  • it's taken us a little while to get here and the last several months have been a

  • bit of a bumpy ride so what do you make of the fact that we are now back at

  • all-time highs for the S&P as a technician that is very exciting as you

  • can imagine and we're seeing gaps up so that's a good thing it shows momentum

  • behind the move it shows that a lot of people were watching the final

  • resistance for the S&P 500 which is right around 30 28 so the breakout is

  • bullish from a technical perspective it relieves the chart of that final

  • resistance and it reflects positive momentum especially with the gaps up

  • that we're seeing with for confirmation of the breakout we'd like to see a

  • couple of days a couple of closing prices above that level to confirm and

  • then we can look at higher target prices the target that we can derive from this

  • breakout in particular is about 31 20 and that's based on a measured move

  • which really just assumes the trajectory of the current trend will maintain

  • itself as you mentioned we'd seen a lot of volatility preceding this breakout or

  • pending breakout and that really was a trading range environment so during that

  • trading range we'd never saw a lot of breakdowns which was a good thing but it

  • was a very frustrating environment for many folks because it was very whippy on

  • a short-term basis now theoretically with a breakout we could get into more

  • of a trending environment all right so is it your anticipation then that we

  • could see a little bit of sideways action from here ideally you know seeing

  • that confirmation and it closes above this new high ground would be positive

  • but how quickly do you think that a new uptrend and holding above this new area

  • could happen well it should happen immediately if this is a real

  • we should see those consecutive daily closes above this week and get somewhat

  • immediate follow-through on back of that we do have a short-term overbought

  • condition that the market is contending with so there's no guarantee that a

  • breakout is confirmed if that's the case I think it's just another little pauses

  • needed to refresh the uptrend and then we'll see a breakout anyway because

  • really around the world we're already seeing these types of breakouts

  • maybe not new all-time highs for different benchmarks but certainly

  • breakouts from that trading range that characterized global equity markets for

  • a few months and then do you think that this also signals at least a little bit

  • of a breather from the volatility that has defined the last several months

  • because we've seen quite the whipsaw action really tied to headlines a lot

  • but does this really signify that that's more or less in the rearview at least

  • for the time being it feels that way there's no way to be certain of that of

  • course but in a trending tape you tend to see less of those down drafts less of

  • that retracement and of course that would be an easier market theoretically

  • to trade because you can stay on the right side of the moving averages and

  • really just sort of ride the trend so theoretically yes alright and we

  • shouldn't be expecting anytime soon a new test then of the longer term moving

  • averages well the 200-day moving average has acted as support for the S&P 500

  • recently it's I believe not to too far below around 28 80 I believe and you can

  • never rule out a test or retest but it's not a mean reverting factor it's not

  • something that acts as a rubber band for the S&P 500 where there's a pullback to

  • that moving average or really any moving average but rather we kind of keep an

  • eye on those overbought conditions look for a sell signals look for any kind of

  • loss of market breadth or participation that would indicate a significant

  • pullback of course right now with breakouts underway we don't have that

  • right so with the breakouts being pretty widespread what are you seeing in terms

  • of the sectors that now look appealing to investors oftentimes what we see when

  • you do see new highs and breakouts you're seeing more offensive sector

  • leadership and by that I mean area like technology which tend to be more

  • Grothe more cyclical areas of the market and we are starting to see signs of life

  • in some of those areas I would also highlight financials as being a source

  • of newfound outperformance it's very new as I mentioned but it could be a basin

  • phase in relative terms for financials which could then be a new upside leader

  • for the market that's right and speaking of financials let's turn our attention

  • to this week's stocks to watch starting with Bank of America

  • so the breakout theme continues here Bank of America moving higher and

  • looking like it's extending its gains what are you seeing in this chart with

  • the underperformance that we had seen from financials and Bank of America as

  • one great example of that especially in 2018 it felt like they were never going

  • to get going again and of course now just in the last couple of weeks we

  • started to see some signs of life there where we're getting some breakouts above

  • important levels Bank of America cleared some former resistance of previous highs

  • where it had met selling pressure and confirmed that breakout it's a little

  • overextended short-term I would say but that breakout completes a trading range

  • that have been in place for several months so again there it releases the

  • the chart of resistance it supports upside follow-through the

  • beyond the near term and shows a resumption of the uptrend that preceded

  • that underperformance in 2018 right and this type of action in the group isn't

  • isolated of course others like JPMorgan also with with similar chart action so

  • this group does look like it has more than just one chart that is a bright

  • spot that's fair to say even the regional banks are acting much better

  • and making higher lows and then subsequently exceeding these short-term

  • resistance levels all of that would make them a turnaround play and I do think

  • it's best to have core long positions in long term uptrend and that would not

  • qualify for many of the financials and yet now with this newfound leadership I

  • do think people should be you know sniffing around for good opportunities

  • fantastic and then another area on your radar is the

  • emerging-market so let's take a look at the EEM iShares emerging markets etf

  • what are you seeing here because at first glance it doesn't really look like

  • it's done a whole lot lately but could that change well it's finally captured

  • some short-term momentum and in doing so it's actually climbed above a year-long

  • downtrend line that if you take a step back on the chart it looks like a big

  • triangle formation that's now being resolved to the upside which is the

  • direction of the prevailing trend before it was established so lower highs higher

  • lows there's the triangle you see the breakout about the down trend line and

  • it's a fairly high probability setup or you tend to see upside follow-through

  • and this would be months and nature not just weeks in nature in terms of the

  • implications so I think it bodes well for emerging markets not necessarily to

  • be a source of great leadership globally although there are some sense of life as

  • the dollar has pulled back there but rather to finally participate in what I

  • think is a global rally right and maybe look at this area as being able to not

  • have that home bias and being able to diversify in other areas that could be

  • strengthening well that and it's a testament to the global breadth behind

  • the move so we do want to see broad participation not just here in the US

  • but also globally and that really enhances the sustainability of the

  • uptrend we're already seeing breakouts and overseas markets like the German DAX

  • as one great example of that and these aren't necessarily new all-time highs

  • but we are seeing those breakouts and I think we'll start to see even some

  • spreading out of the rally rally to things like small caps other areas that

  • had underperformed so it seems like the message then at the end of the day at

  • least for the time being is a lot brighter of a picture than all of the

  • uncertainty and volatility that had been really dominating the market I think

  • it's a relief of that trading range to the upside and of course that does make

  • it a more clear picture ahead from a technical perspective if indeed these

  • breakouts are confirmed but it looks like even if it doesn't happen this we

  • could probably will happen and you know we do have some

  • positive seasonal influences underway potentially in Q4 so it bodes well for

  • that as well all right well I think this is the perfect time to really dive into

  • the technical side of the market so thank you so much for sharing with us

  • what you're seeing in the market right now we're happy - all right and after

  • the break we're going to continue our discussion about sector rotation with a

  • look at a group that's finally leading the market after a period of

  • underperformance and that's coming up next

  • pick winning stocks with Market Smith growth to 50 shows you ideas with big

  • potential view charts packed with key data use pattern recognition to see

  • action zones Market Smith by investor's business daily try three weeks for 1995

  • now it's important for investors to keep tabs on sector rotation because if you

  • know which sectors are leading the market that'll improve your ability to

  • select top stocks and enable you to invest in sectors that are outperforming

  • the market and after a nearly two-year period of underperforming the market

  • we're now seeing strength in semiconductors stocks amid expectations

  • for a turnaround in the chip industry cycle and this strength can be evidenced

  • by the action in the Vanek vectors semiconductor ETFs

  • after a long consolidation in 2018 and choppy action in 2019 SM H is trading a

  • solidly at all-time highs it also remains in buyer range from a breakout

  • past a one twenty three twenty three entry of this Cup with handle based here

  • now SM H tracks the MV is us-listed semiconductor index which holds the most

  • liquid chip stocks based on market cap and trading volume this strength and

  • chip stocks is a positive development for the overall stock market because the

  • semiconductor market is a key sector of the global economy

  • chips play a vital role in many industries enabling emerging trends from

  • 5g to cloud computing to self-driving cars to AI and the Internet of Things

  • among others and within the semiconductor sector chip equipment

  • makers like Lam research have been leading the group LRCX broke out of a

  • base in early September and after a small run the stock was able to hold its

  • gains and move sideways for several weeks then the stock blasted higher on

  • October 24th in reaction to its quarterly earnings report the report

  • showed narrowing declines on the top and bottom lines and the company's outlook

  • was strong the move put shares more than 20% passes by point from early September

  • and was accompanied by heavy volume which indicates strong demand from

  • institutional money managers now group peers KLA MKS instruments and ASML have

  • also been strong performers as of late in another example of recent strength in

  • the semiconductor sector can be found in Taiwan Semiconductor which broke out of

  • a cup with handle base several weeks before its latest quarterly report now

  • the stock wobbled a little bit after the report was issued but shares are now

  • trading at all-time highs up some 14% from the 44 98 by point here

  • and elsewhere in the group nvidia is hitting 11 month highs heading into its

  • quarterly report next month and intel surged higher on October 25th after its

  • latest quarterly earnings report breaking out over a prior resistance

  • level now while breakouts and run ups across

  • the group are positive they're not Universal Texas Instruments gapped down

  • on its latest quarterly report so keep an eye for continued signs of a

  • recovering chip industry cycle and be aware of potential threats to the group

  • from the ongoing US and China trade war and fears for a recession on the horizon

  • all right well coming up next we're sitting down with State Street Global

  • Advisors to put this year's gold rally into perspective and analyze the outlook

  • for gold in 2020 we'll be right back on

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  • calm

  • while gold has been consolidating over the last two months it's been on the

  • move in 2019 the Spyder gold chairs ETF GLD is holding at its highest level

  • since the spring of 2013 and here to share insights about the precious metals

  • gains this year and where gold could be headed in 2020 is George Milling-Stanley

  • Chief Gold Strategist at State Street Global Advisors thanks so much for

  • joining me today George thanks for inviting me so as I said Gold's been on

  • the move this year but taking a step back and looking at the bigger term

  • picture what does the move really mean in terms of what we've been seeing over

  • the long term for Gold's I think it's a pretty substantial move I mean it's it's

  • an inflection point if you like gold was holding in a very narrow range for the

  • six years from the spring of 2013 right up until June of this year and every

  • time the price popped its head above the 1350 dollar area speculative interest

  • would play whack-a-mole and knock it back down they didn't do that in June

  • when the price started to move up and it's important to try to understand why

  • I think they the suggestion from Jerome Powell that the Fed was going to make a

  • mid cycle adjustment I believe it was called at the time and lower interest

  • rates at the July meeting that was probably the proximate cause for why

  • gold has gone up a good deal since then we're now kind of filling in a bit of

  • the gaps that we left behind having moved $200 above that trading range that

  • have been there for six years and I think that's actually very healthy so

  • I'm kind of pleased with with what Gold's been doing recently all right and

  • gold is of course known as a very popular safe haven asset and we have

  • seen a lot of volatility coming into the market over the last few months ed may

  • be subsiding a little bit now but do you think that that kind of relationship

  • between gold and volatility still exists to some extent or not oh no question I

  • mean volatility in other markets has been one of the keys have been a lot of

  • different things behind Gold's move up first there was the interest rate move

  • and then a subsequent move in September and markets are expecting this week yet

  • another cut and then negative interest rates on fixed income securities all

  • around the world that's another driver towards gold as a

  • safe haven volatility in the equity markets you know the best news in

  • markets is that the decades-- have gone up to ten straight years but nobody in

  • their right mind expects that to be repeated over the next 10 so people are

  • very very concerned and that level of concern drives people toward safe haven

  • assets like gold right and speaking of investors flocking to gold can you tell

  • us a little bit more about the demand that's behind this move that we've seen

  • yeah I mean obviously investors safe-haven buying is one