Interesting charts on EMN, CE and ALB. EMN rolling a little bit but inwould add/buy at support. CE looks great and has highest European revenue exposure at about 40% if you want to play a snap back there. ALB could be powerful if it holds at support here but more downside risk if it breaks. A lot of institutional investors looking to add more cyclicality to the mix, fwiw.
Chemicals
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09-27-2013, 12:46 PM
09-28-2013, 12:18 AM
Thanks, Sam.
EMN seems to be about to break out (but that could also be to the downside), CE has already broken out a multiple top, not sure about ALB. http://www.finviz.com/screener.ashx?v=211&t=EMN,CE,ALB
12-04-2013, 03:26 PM
Just an FYI for those interested to look at these names again from a technical point of view. Looks to be a sustainable group move, IMO.
12-05-2013, 12:14 AM
I will, thanks for that, Sam
12-05-2013, 06:53 AM
from a MS strategy piece entitled 2014 in 2014. Explains how some might be looking at the group.
Materials: The sector is only 3.5% of the S&P 500 and is weighted about 2/3rd toward chemicals, so unlike other regions in the world, going overweight materials is not necessarily a bullish call on China infrastructure. We are increasing our exposure from 4% to 6%. Our bets in materials are only in chemicals. We are increasing our long-standing position in LYB from 1% to 2%, and establishing a 1% position in EMN, and retaining our 2% position in MON. Energy: We are downgrading energy from equal weight to underweight and reducing our exposure from 9% to 7% vs. the benchmark weight of 10.4%. The short explanation is that we think Brent oil will go lower. Adam Longson, our commodities strategist, has articulated that excess supply is likely to weigh on the price near-to-medium term. What have we learned over the past few years? When Brent gets to around $125 there is clear demand destruction. So, if the oil price goes higher, investors will think it is more supply-fear than demand and that will weigh on the sector's performance. If oil goes lower, we don't want to own energy stocks. So, we are in a band here where we think it could be “heads you lose, tails you lose” for energy sector exposure. Ole Slorer thinks it's premature to bet on a sustained rally in oil services. The integrated names are not growing and would need a dramatic reduction in capital spending to spur huge free cash flow, and the faster growing oily mid-cap names (EOG, PXD) now seem crowded and have displayed a negative convexity recently (they go down more when oil goes down than they go up when oil goes up). We are removing our 3% position in CVX and now are naked integrated oil in the portfolio. It screens poorly in our 3 month model. We are removing KMI, which Steve Maresca downgraded. We are adding a 2% position to NE, which screens well in our models, is recommended by Ole Slorer, and seems toward the bottom of its tight recent trading range.
12-05-2013, 09:35 PM
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