Gregg Greenberg interviewed Steve Raineri, portfolio manager for the Franklin Small Cap Value Fund (FRVLX) in our offices this week. Raineri highlighted four small-cap names that he anticipated would do well in 2017 -- AAR (AIR) , Sensient Technologies (SXT) , LTC Properties (LTC) and Landec (LNDC) . Because I favor the charts over fundamentals, I am going see what might be just around the corner on the charts in 2017 for these four names.
In the four-year weekly chart above of aviation services provider AIR, we see that prices are well above the rising 40-week moving average line. The weekly on-balance volume has been rising strongly since late 2015. Notice how the OBV line has made a new high ahead of prices breaking out to new highs? The OBV line can be a leading indicator as well as a coincident indicator. In the bottom panel is the trend-following moving average convergence/divergence oscillator, which has been in a bullish mode since July. AIR looks like it will break out to new high ground above $34 next year.
The weekly chart of color, flavor and fragrance manufacturer SXT above is clearly in an uptrend, and barring an unexpected reversal to the downside is probably moving higher in 2017. The OBV line has been slowly and surely moving up with prices and signals aggressive buying, with more volume of shares being traded on weeks when SXT has closed higher. The weekly MACD oscillator crossed downward last month for a liquidate longs sell signal. With such a strong upward trend in place the past four years, this MACD signal may only mean a sideways period of trading before renewed strength.