Unless you’ve been hiding under a rock, or maybe bogged down in a Congressional hearing, you’ve probably heard a little about the exodus from the big-cap, momentum-driven rallies in stocks like Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN). The drops have been swift and severe, reversing the air pocket gains of the past two months.
But throughout the tech-sector volatility, the broad market has remained unperturbed. The large-cap averages continue to hover above their early March highs. And the Russell 2000 Index looks ready to push up and out of its seven-month sideways crawl.
The reason? It’s all about sector rotation, as investors and traders aggressively chase whatever’s hot. A week ago, it was the tech heavyweights. Now, they are rounding back to pockets of value that last moved during the November-March “Trump-flation” rally. I’m talking about stocks in areas like industrials and energy.
Thus, as the focus shifts away from the stocks of the Nasdaq Composite the old dogs in the Dow Jones Industrial Average are perking up. Here are three on the move:
Dow Jones Blue Chips: Exxon Mobil (XOM)
Exxon Mobil Corporation (NYSE:XOM) shares have been in the doghouse since late January amid a persistent global energy market oversupply, bloated crude inventories and doubts about the efficacy of OPEC’s supply freeze agreement strategy amid a rise in U.S. shale activity thanks to a lowered cost of production basis.
But now, value investors are coming back in as crude oil finds some support at its early May low. XOM shares are challenging their 200-day moving average for the first time since January as a result, setting up a possible run at its December trading range near $89.
If it reaches that target, it would be worth a 7% gain from here.
Dow Jones Blue Chips: IBM (IBM)
International Business Machines Corp. (NYSE:IBM) shares are inching up and out of the two-month consolidation range with support near $150 that capped a 17% decline from its February high finding support at its October-November lows.
Investors were disappointed with IBM’s ongoing top-line pressure and inability to adequately adapt to the rise of cloud-based services like Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN) have.
Shares are perking up on rumors of an activist fund getting involved (which could motivate a strategy shift) as well as management recently reiterating strong forward guidance. The company will next report results on July 18 after the close.
Analysts are looking for earnings of $2.75 per share on revenues of $19.5 billion. Edge Pro subscribers are holding a position in the July $35 IBM calls.
Dow Jones Blue Chips: Nike (NKE)
Nike Inc (NYSE:NKE) shares are pushing above their 50-day and 200-day moving averages for the first time since March, up nearly 7% from the May low. Shares were helped by a “buy” initiation by analysts at Berenberg on May 16, who assigned a $70 price target that would be worth a 28% gain from here.
Shares came under pressure back in March — despite reporting better-than-expected earnings — after management revealed future worldwide orders had declined 1% on a currency neutral basis reflecting tepid demand.
The company will next report results on June 29 after the close. Analysts are looking for earnings of 50 cents per share on revenues of $8.6 billion.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
