My Stock Winners

Telecommunications (TTH)
Bullish
Sector trading above its…
20-day Moving Average: YES
50-day Moving Average: YES
100-day Moving Average: YES

Sentiment: Pessimism dominates the sentiment backdrop of the telecommunications sector despite its impressive technical uptrend. In fact, Wall Street has turned its back on the components of this sector. Of the 160 analysts ratings on the components of the Telecommunications HOLDRS Trust (TTH ?39.40), less than 29 percent come in at a “buy,” while an impressive 11 percent rate them a “sell.” This bearish configuration leaves ample room for potential upgrades. What’s more, the number of the exchange-traded fund’s (ETF’s) shares sold short jumped sharply in April, pushing its short-interest ratio even higher. This growing short interest underscores the pessimism that continues to surround the sector.

Outlook: Technically speaking, the ETF is currently resting on support at the 39 level as it consolidates its recent gains, moving into support at its ascending 20-day moving average. The trust remains in a long-term uptrend, rising along the support of its ascending 10-week and 20-week moving averages. As pessimism toward telecommunications stocks unwinds, it should add more buying pressure, keeping the group aloft.

Utilities (UTH)
Bullish
Sector trading above its…
20-day Moving Average: YES
50-day Moving Average: YES
100-day Moving Average: YES

Sentiment: Skepticism is extremely heavy in the sentiment backdrop of the utilities sector. Wall Street has placed some heavy bets against the group as only 27 percent of the 183 analyst ranking on the components of the utilities sector come in at a “buy.” Any upgrades from this dour group could help to add more lift to this sector. Despite the fact that the number of Utilities HOLDRS Trust (UTH ?149.71) shares sold short dropped by 12 percent in April, the ETF still has a hefty short-interest ratio, pointing to high levels of pessimism among short sellers.

Outlook: The shares of UTH have moved sideways recently, consolidating into support at their rising 20-day moving average. A bounce of this short-term trendline should help to boost the equity through the 150 level once again. In addition, an unwinding of the existing pessimism toward the sector should help to fuel further gains in the sector.

Airlines (XAL)
Bearish
Sector trading above its…
20-day Moving Average: NO
50-day Moving Average: NO
100-day Moving Average: NO

Sentiment: Optimism permeates the sentiment backdrop of the airline sector despite its weak technical performance. Wall Street is enamored of the group, as roughly 52.5 percent of the analysts ratings on the components of the sector come in at “buy.” Any downgrades from this optimistic pack could fuel additional losses in this group. Options players have yet to levy heavy bearish bets against the group as the composite Schaeffer’s put/call open interest ratio sits lower than roughly 60 percent of the readings taken during the past year. This complacency against the sector’s weak technical backdrop has bearish implications from a contrarian perspective.

Outlook: The AMEX Airlines Index (XAL ?50.99) is facing staunch resistance in the form of its descending 20-day moving average. This short-term trendline has ushered the index lower since late January. In addition, the XAL’s 50-day moving average is also descending into the region and could add another layer of resistance, keeping the group moving lower during the near term. A rejection at either of these trendlines could result in further downside as the remaining optimism unravels in the form of increased selling pressure.