Let’s face it – stock market investing and economics can be a bit dry. For this reason, market pundits love to create acronyms. It’s fun to use clever sounding names for investment and economic themes. For example:
FANG’s – this stands for the big 4 tech orientated stocks, namely Facebook, Amazon, Netflix, Google.
BRIC’s — these are the advancing economies of Brazil, Russia, India and China.
BREXIT—This was the nickname given to the vote, and new reality behind Britain leaving the EU.
TINA—“There Is No Alternative” to stocks with interest rates so low – as this acronym implies.
ZIRP—Zero Interest Rate Policy has been the norm in Japan for a while, and close to it in North America.
An analyst named Tom Lee with Fundstrat just came out with a new Acronym that is sure to catch on like wildfire.
CRAP is a new acronym that stands for “Computers, Resources, American Banks and Phone Carriers”.
CRAP stocks are expected to do well given the Trump presidency that is expected to lever an economic recovery, bring on new levels of inflation, and offer friendly corporate tax / deregulation policies. Lets take a look at these sectors to see how their charts look.
The NASDAQ computer index is certainly in an uptrend. Leadoff stocks that are influenced by this sector (although not necessarily part of the index) are the FANG’s. We hold Amazon and Google in this group.
Resource equities – particularly those in the energy (oil in particular) sectors and mining sectors (copper is a favorite of mine) are doing well. Perhaps the most diversified stock in this sector is TECK, which is coming back to test a neckline after a huge run. Technically, despite the pullback, the chart shows a healthy pattern so far.
I talked about oil recently. Since that blog, the price of oil broke the $52 neckline I referred to in the article, then fell a bit below it this week. Seasonally oil can pull back a bit in January and it looks to be right on schedule. In fact, I have been waiting for a pullback into late January or early February to buy into the sector. Overall, the formation is good (see the charts on my prior blog) and worthy of consideration in the coming weeks.
What’s not to like about this chart? Sure, the sector has gone parabolic and decidedly needs to pull back. But the breakout after Trump’s election looks great– in an environment of rising interest rates and reduced regulation, I’d think that a pullback should be bought
US carriers Verizon (VZ-N) and AT&T (T-US) are the big boys on the south side of the border. Both have very choppy looking charts, and I don’t like either of them much. On this side of the border, Rogers RCI.B) and Telus (T) look choppy and unappealing as well. The only stock we at ValueTrend like in the group is BCE, which is in an uptrend – we hold a position in the stock. The lesson from this sector is obvious: be selective in buying into the phone carriers.
So grab a coffee and a bran muffin, then review the above charts. Perhaps it will stimulate a movement to add some CRAP stocks to your portfolio.
Great article today!
Regarding Computers, why do you prefer Amazon and Google over
Facebook and Netflix?
I like FB and NFLX too –but we like the longer termed prospects of GOOGL and AMZN best so we focused on those two in our portfolio.
The PIGS have a fair bit of CRAP, maybe the need a TARP to handle their problems?