Old Hat is Back

What does "old hat" mean anyway?

Old Hat - used to refer to something considered uninteresting, predictable, tritely familiar, or old-fashioned.

I started trading in the fall of 2000 when the tech bubble was starting to deflate. I had no idea what the companies I was trading did but the internet was exciting and technology was cool. It seemed like everyone was making money hand over fist. 

Instead of making money "hand over fist", I learned my first lesson, that "cheap" can get a lot "cheaper" and in some instances, the stock that's now "on-sale" (down 50% or more) could even go to zero.

It took another two years for tech stocks to bottom. After that, you might guess they outperformed the less sexy sectors like energy, industrials, materials, and financials. But they didn't.

Here's what happened from 2004 to mid-2007.

XLE (US Energy), XEG (CDN Energy), XLF (US Financials), QQQ (US Tech), XLI (US Industrials)

I love technology. Who doesn't?

I've owned big tech names for years and have traded countless momentum stocks over the last two decades.

The opportunities in tech/growth/momentum were incredible starting in late 2020 but most of the strong uptrends came to an end around February of this year.

Since then we've seen the "uninteresting & old fashioned" not only stand their ground but start to consistently outperform.

Do a few months qualify as a sustainable trend? Time will tell but it's definitely something you should pay attention to as we continue to see strength in the "less exciting" industries.

Take a look at some of the big winners from last week in the Stocktwits Top 25 S&P 500 List - Steel, Copper, Energy, and Agriculture names continue to make regular appearances...

Breakout Watch - Uranium/Nuclear Energy 👀

Uranium/nuclear energy-related stocks have been in a bear market for more than a decade.

In the last five years, price has been building a base trying to put an end to the persistent downtrend.

There's a saying about breakouts from long bases - the bigger the base the higher in space?

Oil & Energy Stocks Update

I posted this chart of XLE (US Energy ETF) in my last email with the following comments:

One month ago the rally in crude oil and the related stocks (XLE) came to an abrupt end. In technical analysis, this is called "overhead supply" or "price resistance".

Let's see what happened...

Will this breakout stick?

I know I'll be watching the price action very closely in this sector as many energy names have been trending higher and showing relative strength.

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