Communication Services continues to improve. Today, we look at recent strength from the media group
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Extra! Extra! Read all about it! While Hollywood box office names have dominated the summer, the real show is unfolding on the charts. Evidently, Communications continue to hold the #1 spot on the DALI sector ranking, showcasing tremendous leadership relative to the other 10 broad market sectors for the past four months. Leading the charge, sector representative XLC has extended its two year uptrend, hitting fresh all-time highs again today. The fund continues to ride strong relative strength trends, having sat in a relative strength column of X’s since February 2023.
There are several different areas you or your clients might be interested in within the sector. Most often the tech focused names within the sector get the most attention, but recently other areas within the sector have performed quite well. Media and other traditional telecom names have been points of strength. The Bullish Percent for Media ^BPMEDI, current readings sit at 44%, the highest we’ve seen since October 2024. To put that in perspective, nearly 4 out of every 10 stocks in the sector are now on PnF buy signals. While not yet overwhelming, this is the first meaningful participation we’ve seen in months coming off lows of 16% in April and its on par with most other sectors as we close out July.
Looking at a more targeted vehicle for media exposure, SOCL maintains a fund score of 5.84, with a fresh trend and established relative strength vs the market SPXEWI. While it may not carry all of the same blockbuster holdings as large cap tech, SOCL offers a direct tie to consumer engagement and digital media growth. Notably, OBOS levels have inflated up to 114%, a significant increase over the last few trading weeks, signaling the fund may be due for some normalization. Watch the middle of the trading band around $50 as a logical entry point in the near-term.
Everything’s better on the big screen, and ROKU brings the big screen home. This 5 for 5’er has surged from a TA score of 2 to 5 in just three months and now ranks 3rd within the Media sector. ROKU has held a relative strength buy signal vs. the market since December 2024 and is up 21% YTD. While the technical setup remains strong, ROKU carries an RRisk of 4.6, making it more appropriate for aggressive investors. The stock is still a bit elevated around current levels but has recently pulled back... offering a decent entry point around current levels. Localized support is found at $89 and $86, and Q2 earnings are expected on 7/31.
