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Key Points

  • Technology and Discretionary Need to Clear their 200-Day Moving Averages
  • Communication Services Builds a Base but Still Lags
  • Energy Continues to Fight to Defend the Long-Term Trend
  • Health Care Gives Up Its Leadership Position
  • Staples and Utilities Begin to Stall on a Relative Basis

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Visiting the Sector Relatives

Information Technology

The Technology sector has reclaimed broken support above the now rising 50-day moving average. Now it must contend with the 200-day moving average to make the claim that the bulls have taken control of the trend. 

Relative to the S&P 500

The relative trend has also broken above resistance above the 50-day moving average. Breaching the March/April peak would be the next step for the group to regain a leadership position.

High Beta / Low Volatility chart for March 25th research.

Consumer Discretionary

The Consumer Discretionary sector has continued to rally after reclaiming the 50-day moving average. There is price-based resistance at the declining 200-day moving average that must be overcome for the bulls to take control of the trend.

Relative to the S&P 500

On a relative basis, Discretionary has made a solid rebound above the 50-day moving average. Breaking above resistance would set the stage for further outperformance.

Discretionary / Staples (EW) chart for March 25th research.

Communication Services

The Communication Services sector continues to build a base at the pre-COVID peak around the 50-day moving average. Investors are still waiting for a clear directional break as the current consolidation plays out below the declining 200-day moving average.

Relative to the S&P 500

The relative trend is moving toward the recent lows, below the 50-day moving average.

Lumber / Gold chart for March 25th research.

Materials

The Materials sector is still fighting to regain broken support and the declining 50-day moving average. Any rally from here will have to contend with the 200-day moving average, which is in the 2021/2022 consolidation zone. There is still a lot of work to do.

Relative to the S&P 500

On a relative basis, the ratio is trending below the 50-day moving average after failing at prior highs. More time is needed for a base to build.

Copper / Gold chart for March 25th research.

Financials

Financials have rallied from support at the pre-COVID high to regain the 50-day moving average. There is still work to do to regain the declining 200-day moving average, which may be an area of resistance in the day/weeks ahead.

Relative to the S&P 500

On a relative basis, the ratio is below support and the declining 50-day moving average.

Small Caps / Large Caps chart for March 25th research.

Industrials

Industrials have made a solid rebound from the pre-COVID highs to retake the 50-day moving average. The group must now prepare to wrestle with the declining 200-day moving average. Getting above this level would set the stage for a run to the prior highs.

Relative to the S&P 500

The relative trend is dancing with the 50-day moving average as it consolidates below resistance.

Growth vs Value (Large Cap) chart for March 25th research.

Energy

The Energy sector is holding the rising 200-day moving average while trading below the declining 50-day moving average. Support at the January 2020 highs is the key level for the bulls to defend should the 200-day give way.

Relative to the S&P 500

The relative trend remains under pressure, below resistance, and the 50-day moving average. Regaining these levels would put the bulls back on top.

Growth vs Value (Large Cap) chart for March 25th research.

Consumer Staples

Staples continue to consolidate, trading around the 200-day moving average and above the 50-day moving average. The trend is neutral.

Relative to the S&P 500

The relative trend remains in a near-term consolidation above support but below the declining 50-day moving average. Equity bulls want to see this ratio break support and continue to move lower.

Growth vs Value (Large Cap) chart for March 25th research.

Utilities

Utilities are rising in a choppy, sawtooth fashion and have moved above the 50 and 200-day moving averages. There is room for the recent highs, and the moving averages should provide support for a pullback.

Relative to the S&P 500

The relative trend is stalling at the 50-day moving average below resistance. Here too, equity bulls want to see the ratio move lower.

Growth vs Value (Large Cap) chart for March 25th research.

Health Care

The Health Care group is fighting at the 50 and 200-day moving averages after reclaiming broken support. There is still a lot of work to do before the bulls take control of the trend. 

Relative to the S&P 500

The relative trend has lost upside momentum and has sliced below the 50-day moving average.

Growth vs Value (Large Cap) chart for March 25th research.

Real Estate

Real Estate is holding above support and the 50-day moving average while trading below the declining 200-day moving average.

Relative to the S&P 500

On a relative basis, the group is in a neutral trend, oscillating around the 50-day moving average below resistance.

Growth vs Value (Large Cap) chart for March 25th research.

Take-Aways

Many sectors have seen strong rebounds take their prices above their respective 50-day moving averages. At the same time, many remain below their declining 200-day moving averages. This dynamic shifts the trends from bearish to neutral, leaving more work to do before the bulls can claim that they have regained control. One bullish datapoint is stalling of bullish relative trends on the part of the defensive sectors of the market, especially Staples and Utilities.

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