Why are Large Cap Leaders leading?
While the major indices still try to sort out the next interest rate direction, soft, hard or no landing, and/or if inflation has peaked, a few stocks have dominated. Companies like Steel Dynamics (both holdings in the quant model) are in the manufacturing and infrastructure sectors.
"Existing programs sponsored by the industry and government, such as Partnership for a New Generation of Vehicles, Aerospace Industry Association, USFEAST or AMTEX, or an industry-sponsored program such as the National Electronic Manufacturing Initiative, fall into the framework categories of advanced manufacturing systems and advanced manufacturing processes and equipment." -- National Academic Press
In the current environment, manufacturers are reliant on infrastructure for receiving and then delivering raw materials in a timely fashion. Furthermore, the scarcer the supply of raw materials, the more expensive it is for manufacturers and consumers. To date, stocks GE and STLD have rallied and withstood rising costs.
The beauty of quants is they do the math without judgement.
Steel Dynamics (STLD) may be on the verge of another breakout after a month of price consolidation.
STLD, according to our Triple Play, outperforms the benchmark. And the real motion momentum indicator shows momentum improving but not yet wowing. Wednesday's close was the all-time highest close in STLD. With indices red to flat, that is incredible. This and Century Aluminum (CENX) featured earlier this week, are proof that commodities are still not only a thing -- but THE thing.
And don't forget to read the Daily we published over the weekend on Energy and Oil prices. That sector could be next!
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