My background is in public accounting. I spent two decades there and I always like to say that "I never met a spreadsheet that I didn't like!" I love to analyze. I actually enjoy studying numbers and relationships and read into the subtleties of what's truly taking place under the surface. I used to analyze labor and machine costs in manufacturing, trying to find optimal levels of running time vs. down time. Did it make sense to take on 20% more sales at lower margins in order to run multiple manufacturing shifts? How did overtime play into that? I've just always loved to analyze to figure out the best ways to run a business.
That mindset carries over to the stock market. When the Fed finally turned from hawkish to bearish in 2019, industry groups and individual stocks reacted in varying fashion. I studied key price points and dates during the Fed's transition to gain perspective as to how the market was shifting, so that I could shift accordingly.
Now a very different kind of transition is taking place. For the first time in my investing lifetime, we've added a new variable to the mix - a global pandemic. Paradigms will change. They already are. Studying the price action in industry groups and individual stocks right now is absolutely critical for stock market traders and investors. The "work from home" paradigm shift is one that I believe will last a lifetime. More people will work from home and need to collaborate online than ever before. Companies that aid that transition will clearly benefit. Zoom Video Communications (ZM) and Slack Technologies (WORK) are two that quickly come to mind (Disclosure: I trade both of these stocks frequently and currently own ZM). But there are and will be plenty more.
Here's an industry group that has crushed the S&P 500 on a relative basis since all the hysteria began - mobile telecommunications ($DJUSWC). Since February 19th (price top on the S&P 500), the DJUSWC has fallen 11.17%, well below the S&P 500's tumble of 25.11%. This industry trails only gold mining ($DJUSPM) and mining ($DJUSMG) over this period. A big beneficiary has been T-Mobile (TMUS). A quick glance at the chart doesn't reveal much, but check out its accumulation distribution line:
I'd argue that professionals are adding TMUS to their portfolios. In this morning's Trading Places LIVE show at EarningsBeats.com that begins momentarily at 9am EST, I'll delve into other potential winners and reveal more from my study. If you'd like to tune in, here's the room link:
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Happy trading!
Tom
