In a choppy week, seasoned SIA practitioners take time to review sector and stock rotations across the hundreds of reports generated each night. Today, we have completed this exercise using both the SIA S&P 500 Index Report and the SIA Sector Report to identify anything that appears anomalous. Given the ongoing challenges surrounding tariffs and the automobile industry, it may seem that the sector is facing significant headwinds. However, the SIA system may be detecting early signs of sector rotation.
We are also observing a similar picture within the SIA Health Care arena. In both cases, these developments are appearing on a weekly basis and could simply reflect a flight to safe havens rather than the early stages of a broader trend. That said, we believe it is worth noting, at minimum as a journal entry, given the current market context.
Last week, we highlighted the vulnerable position of the SIA Software sector, where only a few leading stocks were maintaining strength while the broader group declined on both a relative and absolute basis. This trend has continued into this week, with leadership stocks also joining the broader selloff.
This naturally raises the question of where the next area of sector leadership may lie. That brings us to today’s review, which aims to identify potential emerging leadership. While new leadership can develop slowly, shifts often become visible when viewed through weekly and monthly lenses.
We begin by breaking down the SIA S&P 500 Index Report and reordering it by top weekly gainers. The results are noteworthy. Three themes emerge from the top movers.
First, Health Services is showing the most significant gains in relative strength. Nine of the sixteen top gainers fall within the health care sector.
Second, two of the top names are part of the SIA Automation Sector. These are General Motors Company and its spin-off, Aptiv PLC, which is the focus of today’s Daily Stock Report.
Third, which we will explore further in a future update, is First Solar. A past relative strength leader, it has returned to the SIA Favored Zone of the SIA S&P 500 Index Report. Earlier in the week, the system also detected gains in relative strength across the sustainable energy group and among solar and alternative energy ETFs.
Turning to the SIA Sector Report sorted by relative strength gainers, we continue to see notable declines in SIA Computer Software and SIA Energy. These are two sectors that have caused considerable whipsaws for advisors this past quarter. The Energy sector in particular may be testing the patience of many portfolio managers as it potentially enters another false start.
On the other side of the report, the top gainers include SIA Consumer Durables, SIA Utilities, SIA Real Estate, SIA Automotive, and SIA Banking. All except SIA Banking remain in either unfavored or neutral positions within the SIA Sector Report. It is important to note that these are not current leadership sectors. Rather, they are weekly gainers that may serve as early signals for advisors reviewing reports for transitional opportunities.
One such transitional idea may be Aptiv PLC. Aptiv is a global technology company in the automotive space, specializing in advanced mobility solutions aimed at enabling safer, more sustainable, and more connected transportation. Headquartered in Dublin, Ireland, Aptiv was formed in 2017 following the split of Delphi Automotive. It operates through two key segments: Advanced Safety and User Experience, and Signal and Power Solutions. The company produces a wide range of products including autonomous driving systems, vehicle connectivity platforms, and high-voltage components for electric vehicles. Aptiv positions itself as an innovator in automotive technology focused on meeting the evolving demands of the mobility landscape.
Technically, shares of APTV have now reversed trend on the Point and Figure chart. They have completed a series of buy formations including a double top, a spread triple top, and most recently another spread double top, which may indicate that buyers are beginning to take control of the chart. Initial support levels can be observed at the three-box reversal point of 70.34, followed by 63.71, and more deeply at 54.38. Resistance levels may surface at the 2022 levels of 79.22 and 87.46, with a broader resistance zone between 90 and 115, and a long-term resistance cap at 124.91. While these are elevated levels, we include them in case the stock experiences a strong breakout.
Aptiv currently carries an SMAX reading of 9 out of 10, which serves as another positive indicator of relative strength. This score compares Aptiv not just to other components within the SIA S&P 500 Index Report but also to a broader basket of alternative asset classes. Still, it is important to reiterate that APTV is a weekly relative strength gainer and not yet one of the top-ranked names in the SIA system. It remains in the neutral zone of the SIA S&P 500 Index Report. As such, this should be viewed as transitional data. These early signals may or may not evolve into longer-term trends, as leadership often takes time to develop and confirm.
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