Trading Places with Tom Bowley

Pandemic Index: Recent Relative Strength Means We Should Start Looking At Different Industries

Tom Bowley

Tom Bowley

Chief Market Strategist, EarningsBeats.com

Ever since the worst industry groups in March and April revealed themselves, I've been tracking what I refer to as my Pandemic Index. It's an equal-weighted index of the 10 worst performing industry groups during the pandemic's first few months. A key resistance level for this index was established at the June 8th high and we're rapidly approaching that watermark now:

If you look from that June 8th high through the early-September high, you'll see that the Pandemic Index underperformed. It was falling while the S&P 500 was rising. But it's been a different story since that September high. The Pandemic Index has become a relative leader. The real relative strength, however, has really occurred over the past two weeks - since the late-October low. I still want to see the Pandemic Index clear the June high, but I believe that will happen in time. In fact, 3 of the 10 industry groups included in the Pandemic Index have already cleared their June 8th high. I'll provide one of them below:

Dow Jones U.S. Hotels Index ($DJUSLG)

The key here for me is the relative breakout. Hotels are now trading at an 8 month relative high and breaking out. That's a good combination. Finding a leader in this industry group is the next step.

I'll be discussing this group and many others in what I believe will be one of the most important webinars in EarningsBeats.com history. It starts later today at 4:30pm ET and is for EB members only. It's actually the first of three very important members-only webinars this week. For more information, CLICK HERE.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More