Welcome back for another Top Down Trade of the Week.
This is a classic leadership scan.
We start with the best sectors, then drill into the subgroups. We pick one, and then take a look at the top stocks in it.
This week’s standout is Industrials, climbing to the number two spot in our sector rankings.
Technology keeps leading, but other areas are starting to catch up.
The industrial sector is one of the best gauges of overall market health. It’s the most diversified group and has the highest correlation to the major averages.
I like to call Industrials the “generals” of the market. When they march higher, it means things are good for risk assets more broadly.
On the other hand, Materials also jumped three spots this week, showing renewed strength from the cyclical corners of the market.
There’s real opportunity here—and staying open to rotation into these groups just makes sense.
With risk-off sectors stuck at the bottom of our rankings, it’s clear investors aren’t playing defense.
Here is a look at our overall industry rankings, which shows Building Products jumping into the top 20.
These are some of the most economically sensitive stocks out there—a real barometer for both the economy and the market. And evidence suggests they are ready to play catch-up.
A lot of building products components fall into the housing theme, which we like a lot right now.
We just released a deep-dive with everything you need to know, including our favorite trades. Click here to check it out.
These are the Top 10 building products names, sorted by relative strength
My favorite setup from the list is a $62B heavyweight in HVAC, refrigeration, and fire safety.
Here’s Carrier Global Corp $CARR:
The stock is tightening up just below key resistance at the 161.8% extension. This follows a clean breakout from a three-year base and a successful retest of former highs. It’s been a healthy consolidation, and I think CARR is ready to resume its uptrend.
We want to own CARR on strength above 75 with a target of 101.
Our team at ASC is constantly running these kinds of top-down scans. If you want access to our research and the trade ideas that come out of it, join us today—risk free.
