Key Points
- Growth Sectors are Testing Important Support
- Communication Services Eyes the Pre-COVID Highs
- Cyclicals Are Mixed, Energy Tries to Reassert a Bullish Trend
- Financials and Industrials Struggle to Keep Pace
- Defensive Groups Are Relative Leaders, but Absolute Trends Are Neutral
Visiting the Sector Relatives
Information Technology
The Technology sector continues to do battle with the 2,500 level, below the declining 50 and 200-day moving averages. While it is encouraging to see the bulls defend this level, it is hard to become too excited with the index below the moving averages.
Relative to the S&P 500
Consumer Discretionary
The Consumer Discretionary sector remains in a bearish trend below the 50 and 200-day moving averages. Last week we called out that the March lows were in play, and they have been reached. Thus far, they are being defended, but it is too early to begin to make a bullish case.
Relative to the S&P 500
Communication Services
Communication Services remains under intense pressure, below the declining 50 and 200-day moving averages. The pre-COVID peak is a logical next support level.
Relative to the S&P 500
Materials
Materials continue to test the moving averages after establishing resistance near the 570 level. The trend is neutral as the battle for control rages between bulls and bears.
Relative to the S&P 500
Financials
Financials have broken support as they remain below the declining 50 and 200-day moving averages. Below the 580 level, there is room down to 520.
Relative to the S&P 500
Industrials
Industrials have also broken support below the declining 50, and 200-day moving averages as the bears take control of the trend. Below 830, the 760 level is the next logical support level.
Relative to the S&P 500
The relative trend is holding the 50-day moving average. Clearing the March peak would complete the bearish to bullish reversal.
Energy
The Energy sector is fighting hard at the rising 50-day moving average, which is well above the rising 200-day moving average. The bulls are in control of the trend and breaking 600 would be a sign that uptrend is resuming. Below 530, the bullish case will have to be reassessed.
Relative to the S&P 500
Consumer Staples
Last week showed us that in a bear market, even the defensive sectors are not immune to selling pressure. The Staples have pulled back below the breakout level. The index remains above the 50 and 200-day moving averages, keeping the trend in favor of the bulls.
Relative to the S&P 500
Utilities
Utilities also closed below the breakout level. Additionally, the group has lost the 50-day moving average, putting it in a neutral position. The rising 200-day moving average is a key line in the sand for the bulls.
Relative to the S&P 500
Health Care
After losing support at the breakout level, Health Care has given up the 50 and 200-day moving averages. The trend is neutral, awaiting a clear direction.
Relative to the S&P 500
Real Estate
Real Estate has broken below support at the 300 level and moved below the 50 and 200-day moving averages. The trend is now neutral.
Relative to the S&P 500
Take-Aways:
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