Advantage Data: Junk sectors end year posting sixth straight gain

By Paul Deckelman

New York, Jan. 3 – The junk bond market made it six straight weeks on the upside during the most recent reporting week (ended Dec. 30), after having decisively broken out of its recent rut in late November by snapping a four-week-long losing streak, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

Those four weeks of losses, running through the week ended Nov. 18, had, in turn, followed five straight weeks of gains before that, lasting through the week ended Oct. 21.

In the latest 10 weeks, dating back to the week ended Oct. 28, there have been six weeks of gains, balanced against the four weeks of losses.

On a somewhat longer-term basis, in the 52 weeks of 2016, gainers dominated in 39 of those weeks, versus 13 weeks in which more negatives were seen.

Eleven of those better weeks came during a long winning streak which began during the week ended Feb. 19 and extended through the week ended April 29.

A subset consisting of the 33 largest sectors (out of the total of 61 broad-industry sectors into which Boston-based Advantage Data currently divides its entire high-yield universe), showed 32 of those bigger sectors finishing in the black last week, versus only one ending in the red.

That was little changed from the results seen in the week ended Dec. 23, when 31 sectors had shown gains and only two had losses on the week.

The past two weeks have represented a solid improvement from the mediocre pattern seen during the week ended Dec. 16, when 18 of those key sectors had shown gains, with 15 showing losses.

The most recent six weeks have represented virtually a complete reversal from the week ended Nov. 18, – the most recent negative week – when 29 of the sectors had ended in negative territory, versus only three sectors ending on the plus side, as well as one unchanged sector.

Among specific large-sized sectors during the Dec. 30 week, healthcare services posted the biggest gain, while automotive services had the worst loss for a second straight week.

Coal mining was the best year-to-date performer for a sixth straight week and on a longer-term basis for an 11th week out of the last 13.

Healthcare – despite its positive showing on the week – remained the worst year-to-date performer for a fourth week in a row.

Healthcare highest on week

But for the week, healthcare turned in the strongest performance of any large-sized sector, as noted, rising 0.55%.

It was healthcare’s second consecutive week among the Top Five best-performing large-sized sectors, having also been there during the Dec. 23 week with a 0.45% advance.

Also showing strength during the latest week were oilfield services (up 0.53%), chemical manufacturing (up 0.51%), insurance carriers (up 0.49%), and energy exploration and production (up 0.45%).

Oilfield services had spent the Dec. 23 week among the Bottom Five worst-performing large-sized sectors with a meager 0.11% gain, but the grouping has now been among the top finishers twice in the past three weeks and three times in the last five weeks, including the week ended Dec. 16, when it was up by 0.97%, leading all of the major sectors that week.

The chemical makers, including pharmaceutical firms, had been among the Bottom Five finishers in the Dec. 23 week, when the sector gained just 0.10%, its second straight week among the underachievers and its third week there in the previous four.

Automotive services skid again

On the downside, automotive services was the only sector actually finishing in the red last week, losing 0.06%.

It was the sector’s third straight week among the Bottom Five and its second week in a row of posting the worst performance among the key sectors; during the Dec. 23 week, its 0.29% loss was the largest of any such sector.

With just automotive services showing a loss in the latest week, as noted, sectors showing only very small gains filled out the week’s Bottom Five list.

These included the industrial and commercial machinery and computer equipment manufacturers (up 0.07%), metals mining (up 0.12%) and three sectors each posting a weekly gain of 0.14% – amusement and recreation services, paper manufacturing and primary metals processing.

Metals mining finished among the underachievers for a second straight week, having also been there during the Dec. 23 week with a 0.09% loss.

The papermakers have now been among the Bottom Five in five weeks out of the last six, including the week ended Dec. 16, when they lost 0.35%.

Coal was best on year

Coal mining remained clearly the best year-to-date performer among the large-sized sectors as 2016 ended, holding the top spot for a sixth straight week and an 11th week out of the last 13, with a 137.40% cumulative return.

It was followed by metals mining (up 70.12%), energy exploration and production (up 43.46%), oil and gas extraction (up 43.16%) and primary metals processing (up 30.88%) – the sixth consecutive week during which those sectors had finished in that exact same 1-to-5 order.

Healthcare again worst on year

Healthcare – despite its relatively robust showing on the week – remained at the bottom of the cumulative rankings for a fourth consecutive week, wrapping up 2016 with just a 5.47% return on the year.

Other cumulative underperformers were chemical manufacturing (up 5.50%), automotive services (up 6.03%), food stores (up 6.63%) and precision instrument manufacturing (up 8.30%).

© 2015 Prospect News.
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