The highest scoring names in large cap from 1 year ago (2/12/2013) returned 437 bps more than the S&P 500.  The best performers are BIIB up 91%, YHOO up 75%, BSX up 73%, PCLN up 70%, TMO up 59%, and ITT up 57%.

•    The best scoring large cap sector is industrial goods
•    The top scoring large cap industry is drug stores

The average large cap score is 66.18, above the four week moving average score of 65.44. The average large cap is trading -10.7% below its 52 week high, 3.97% above its 200 dma, has 4.34 days to cover held short, and is expected to grow EPS by 13.3% next year.

The best scoring sector is industrial goods.  Healthcare also scores above average.  Services, technology, and consumer goods score in line.  Basics, financials, and utilities score below average.

Commentary:
 

The following chart shows large cap sector scores since 2010.


 

The best scoring large cap industry is drug stores (OCR, RAD, CVS, WAG).  Lodging (WYN, MAR, HOT) scores highly thanks to improving RevPAR, supported by business travel.  In the most recent week, RevPar grew 4.7% versus a year ago. Capacity additions will eventually slow RevPAR growth, however, will provide near term sales and profit upside until that new capacity outstrips rising demand.  626 hotels are expected to open in the U.S. this year and another 1315 are expected to open in 2015.  Aerospace/defense (TDG, RTN, NOC, LMT, HON, GD, COL) benefit from rising OEM production volume at BA and Airbus and from improving clarity into DoD budgeting. Growth in foreign defense sales offers additional support.  Global defense budgets are expected to increase this year for the first time since 2009, with the Middle East expected to grow most quickly.  Increasing spending in Russia and China provide long term budget support for the DoD.  Rails (UNP, NSC, CSX) revenue offers opportunity as carload volume supports pricing.  Ex-coal rail carloads were up 1% in January from a year ago, led by grain (exports) and petroleum (Bakken).  Communication equipment (GLW, HRS, QCOM) rounds out the best scoring large cap industries this week.

In large cap basics, buy ag chemicals (CF, DD, MON), independent oil & gas (SWN, RRC, XEC, CNQ), and drillers (HP, RIG, CLR).  Fertilizer prices have declined by double digits across each of the 8 major types in the past year, however, prices for 5 of the 8 have climbed in the past month, led by nitrogen. In consumer goods, focus on textiles (VFC, HBI, UA, MHK), beverages (CCE, MNST, BF.B), and cigarettes (LO, RAI).  Across financials, concentrate on credit services (MCO, DFS, EFX, AXP), REITs (FRT, ESS, VNO), and money centers (PNC, JPM).  The net percentage of domestic banks tightening standards on consumer loans/credit cards stands at -7%, down from -2% last year.  The best healthcare baskets include medical appliances (STJ, ZMH), biotechnology (ILMN, MDVN, BIIB, GILD, CELG, REGN), and medical instruments (BDX, BSX, COV).  Every industrial goods group is above average.  Buy aerospace/defense, diversified machinery (FLS, XYL, IR), and industrial equipment (PNR).  Drug stores, lodging, and railroads are best in services.  The highest scoring groups in technology are communications equipment, scientific & technical instruments (MTD, WAT, A), and semi ICs (SWKS, MRVL).