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Aug. 10, 2018, 11:41 a.m. EDT

S&P 500 is stalling, but these 3 sectors are scaling fresh highs like clockwork

Momentum could be pointing to big gains going forward for these parts of the stock market

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By Jeff Reeves, MarketWatch


AFP/Getty Images

Investors remain ever-so-close to popping the Champagne corks yet again, ready to cheer another new record for the stock market.

But lately, it has been hard for the benchmark S&P 500 /zigman2/quotes/210599714/realtime SPX +0.91%  to break through that all-important 2,900 mark. Heck, after setting highs just shy of that measure in January, the S&P has had trouble even staying in the 2,800 range.

Approaching new highs but running into resistance isn’t an uncommon occurrence, and technical traders will note that consistently higher lows across the last few months are a bullish sign even if we haven’t been able to breach 2,900 just yet.

But it’s important to remember that this is indeed a market of stocks, and that there is a lot of variety among sectors and individual names. In fact, even as the S&P 500 has been struggling to set a new high for a while, there are a bunch of sectors that have been locked into clear uptrends.

Here are three sectors where stocks are setting new highs like clockwork, and momentum could be pointing to big gains going forward — regardless of how long the S&P takes to break out.

Consumer discretionary

There has been a lot of talk in the last year or so about the power of American consumers, with confidence metrics hitting 18-year highs and strong spending metrics helping the U.S. to post its fastest pace of GDP growth since 2014.

For investors, the consumer-discretionary slice of the S&P 500 reflects this strength in a big way, with this sector at a 52-week high. Furthermore, financial data firm Barchart shows that roughly 65% of its stocks are above their 100-day moving average. That indicates this is a broad-based rally and not just a few big names carrying the day.

That said, a few high fliers certainly stand out. Amazon.com /zigman2/quotes/210331248/composite AMZN +0.64%  is the easy one, with year-to-date gains of 60% and no sign of slowing down even as other FAANG stocks have hit a bit of volatility lately. However, other big winners include retailer Macy’s /zigman2/quotes/201854387/composite M +0.26% and burrito purveyor Chipotle Mexican Grill /zigman2/quotes/200781108/composite CMG +0.34% ; their shares have roared back with a vengeance that year and are up about 60% in 2018.

/zigman2/quotes/201854387/composite M 15.15, +0.04, +0.26%
/zigman2/quotes/200781108/composite CMG 822.48, +2.75, +0.34%

There are a host of smaller names worth checking out that aren’t part of the broader S&P 500 index. These include fast-growing weight-loss brand Medifast /zigman2/quotes/204273018/composite MED +0.50% , which has tripled in 2018 and continues to power higher after blowout earnings in early August that showed 55% sales growth an 84% profit growth.

With strong big-picture consumer metrics and with impressive gains for stocks in the sector lately, it’s hard to bet against discretionary stocks right now regardless of any broader volatility.

Utilities

It may sound crazy to consider the utilities sector as dynamic. But look at the numbers: As of Friday, 100% of the 29 utility stocks in the S&P 500 were above their 100-day moving average. That’s right — every single one!

Furthermore, 12 out of 29 are just a 5% move or less from a new 52-week high. Among these names are Exelon Corp /zigman2/quotes/205982254/composite EXC 0.00%  and FirstEnergy /zigman2/quotes/201870541/composite FE -0.06% .

/zigman2/quotes/210599714/realtime
US : S&P US
3,145.91
+28.48 +0.91%
Volume: 1.70B
Dec. 6, 2019 5:07p
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,751.60
+11.12 +0.64%
Volume: 3.12M
Dec. 6, 2019 4:00p
P/E Ratio
77.55
Dividend Yield
N/A
Market Cap
$868.44 billion
Rev. per Employee
$359,671
loading...
/zigman2/quotes/201854387/composite
US : U.S.: NYSE
$ 15.15
+0.04 +0.26%
Volume: 17.14M
Dec. 6, 2019 6:30p
P/E Ratio
4.90
Dividend Yield
9.97%
Market Cap
$4.68 billion
Rev. per Employee
$197,992
loading...
/zigman2/quotes/200781108/composite
US : U.S.: NYSE
$ 822.48
+2.75 +0.34%
Volume: 390,457
Dec. 6, 2019 6:30p
P/E Ratio
74.95
Dividend Yield
N/A
Market Cap
$22.86 billion
Rev. per Employee
$66,644
loading...
/zigman2/quotes/204273018/composite
US : U.S.: NYSE
$ 90.57
+0.45 +0.50%
Volume: 208,014
Dec. 6, 2019 6:30p
P/E Ratio
14.93
Dividend Yield
4.99%
Market Cap
$1.05 billion
Rev. per Employee
$1.19M
loading...
/zigman2/quotes/205982254/composite
US : U.S.: Nasdaq
$ 44.86
0.00 0.00%
Volume: 4.44M
Dec. 6, 2019 4:00p
P/E Ratio
18.86
Dividend Yield
3.23%
Market Cap
$43.61 billion
Rev. per Employee
$1.08M
loading...
/zigman2/quotes/201870541/composite
US : U.S.: NYSE
$ 48.38
-0.03 -0.06%
Volume: 2.29M
Dec. 6, 2019 6:30p
P/E Ratio
22.91
Dividend Yield
3.22%
Market Cap
$26.14 billion
Rev. per Employee
$901,313
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