Entering text into the input field will update the search result below

BofA looks to close year with a bang, and picks in Materials, Pharma

Nov. 04, 2020 7:26 PM ETGRMN, PFE, IP, SEE, PKG, RARE, DDBy: Jason Aycock, SA News Editor
  • If you're feeling tense these days, a BofA look at expected cyclical rotation may have just what you need: expectations for a market surge to wrap up 2020.
  • After market pullbacks in September and October, that "product of a confluence of bearish seasonality, election volatility and anxiety in the wake of the early-2020 COVID correction will likely give way to a year-end rally," it says.
  • BofA has been consistent in pointing to a bullish rotation for cyclical stocks, with its Relative Rotation Graph seeing Industrials and Materials moving into the "Leading" quadrant, followed not too far behind by Financials.
  • (Along the way, BofA chides Defensives, Real Estate, Staples and Utilities for hanging in the "Strengthening" quadrant rather than moving into "Leading," as they hadn't perked up meaningfully until the end of the most bearish three-month period of the year and a U.S. election.)
  • Relative to the S&P 500, it says Communications Services has stayed in a secular uptrend off the 2008 low, which has brought the group to big resistance (at a long-term 2001 relative downtrend). But it's reminiscent of the 2012 break above 2004 relative resistance that brought a couple of years of outperformance vs. the S&P 500.
  • As for Materials, there's still a mixed setup there, it notes, though "tactically bullish" with an improving long-term case. "The group signaled tactical strength on a break above the 2018 relative downtrend but remains mired in a long-term 2011 relative downtrend."
  • Among materials stocks, it's highlighting bullish setups for DuPont (DD, taking a bullish turn), International Paper (NYSE:IP), Packaging Corp. (NYSE:PKG) and Sealed Air (SEE, with "potential for a five-year bullish turn").
  • Elsewhere, it's also pointing to additional bullish setups for Garmin (NASDAQ:GRMN), Ultragenyx Pharma (RARE, breaking out from a "big four-year base") and Arena Pharma (NASDAQ:ARNA).

Recommended For You

More Trending News