Bullish Trends Are Few
and Far Between

by | Apr 19, 2022

Key Points

  • Growth Sectors Remain Unimpressive
  • Communication Services Remain a Clear Loser
  • Cyclicals Are Split, Energy Reasserts Leadership
  • Materials Build on Recent Relative Strength
  • Defensive Groups Hold Relative Position, Absolute Trends Are Suspect

Visiting the Sector Relatives

Information Technology

It has been more of the same for the Technology sector over the past week. The index is moving lower after failing at resistance and breaking the 50 and 200-day moving averages. Support near 2,500 is now in play; below that level, the bears are in clear control.

Relative to the S&P 500

The relative trend is bearish below resistance and the declining 50-day moving average.

Consumer Discretionary

The Consumer Discretionary sector is holding below the 50-day moving average, which is below the 200-day moving average. This dynamic is more bearish than bullish, putting the March lows near 1,280 in play.

Relative to the S&P 500

On a relative basis, Discretionary has regained the 50-day moving average but remains below resistance, making it hard to become overly excited about this group which was simply “less bad” over the past week.

Communication Services

Communication Services stocks continue to move lower, seemingly intent on paying a visit to the support near the 215 level. The index is below the declining 50 and 200-day moving averages, keeping the bears in the top position.

Relative to the S&P 500

Relative to the S&P 500, the group remains in a downtrend, below the declining 50-day moving average and near one-year lows.

Materials

Materials continue to stall above the moving averages, and price-based support in a market where not going down is winning. Breaking the January highs would put the bulls in clear control.

Relative to the S&P 500

On a relative basis, the bulls continue to build on their advantage. The ratio is strongly moving beyond resistance and the 50-day moving average.

Financials

Financials remain in a consolidation zone, above the 580 level but below the 2021 highs. The index is holding below the 50 and the 200-day moving averages. The trend remains solidly neutral, but there is a small edge developing for the bears.

Relative to the S&P 500

On a relative basis, the group remains in a choppy consolidation, but a downside bias remains as the ratio holds below the declining 50-day moving average.

Industrials

Industrials remain in a neutral position, stuck in a consolidation that has been in place for a year. The bears retain their edge with the index below the 50 and 200-day moving averages. A break of the 830 level would put the bears in control of the trend.

Relative to the S&P 500

The relative trend is holding below the declining 50-day moving average, keeping the January lows in play.

Energy

The trend in Energy remains bullish, with price above the rising 50 and 200-day moving averages as the group reasserts itself and moves to a new high after a short pause. The pause allows us to establish a near-term support level in the 580 – 590 zone.

Relative to the S&P 500

The relative trend is also reasserting to the upside as the ratio is on the verge of breaking above the March high. The steadily rising 50-day moving average supports the bullish trend.

Consumer Staples

Staples are holding above the 810-support level and the rising 50 and 200-day moving averages.

Relative to the S&P 500

The relative trend is also holding near the highs, above support, and the rising 50-day moving average.

Utilities

Utilities continue to stall after trading to new highs recently. The nearly vertical move since breaking out in March leaves the moving averages and price-based support well below current levels.

Relative to the S&P 500

The relative trend is bullish, above the rising 50-day moving average and price-based support. The ratio is trading near recent highs.

Health Care

Health Care continues to trade above the breakout level but is putting it to the test. The index is also above the rising 50 and 200-day moving averages. The bulls are still in control, but the bears are not giving in.

Relative to the S&P 500

On a relative basis, the ratio is above the 50-day moving average and the breakout level, keeping the group in a leadership position.

Real Estate

Real Estate bulls keep the ball above the 300 level, but the bears are trying hard to force a fumble. A break would target the rising moving averages. 

Relative to the S&P 500

On a relative basis, the group is holding near recent levels above the rising 50-day moving average.

Take-Aways:

The environment continues to be one where “less bad” is good enough to take a leadership position. The groups that are in clear bullish trends (Energy, Staples, and Utilities) are few and far between. Growth sectors continue to lag. Cyclicals are split as Industrials and Financials fail to impress. Defensive groups are holding up on a relative basis. 

Disclosure: This information is prepared for general information only and should not be considered as individual investment advice nor as a solicitation to buy or offer to sell any securities. This material does not constitute any representation as to the suitability or appropriateness of any investment advisory program or security. Please visit our FULL DISCLOSURE page.