Key Points
- Software Is Leading the Technology Sector
- Bullish Trends: Technology, Discretionary, Energy, and Financials
- Neutral Trends: Communication Services, Materials, and Industrials
- Bearish Trends: Utilities and Staples
- Improving: Real Estate and Health Care
Chart in Focus
Technology is strong, and Software is the leader. The S&P 500 Software Index has powered to new highs above the rising 50-day moving average. Support lines up with the moving average near 5,300 above these levels and the uptrend is likely to continue.
Relative to the broader Technology sector, Software is a clear leader after breaking prior highs. The rising 50-day moving average defines the trend.
Information Technology
The Technology sector has broken to new highs along with the major market averages in the U.S. The sector trades above the rising 50-day moving average with support at the breakout level near 2,800. Above this price point, the bulls are in control, and the uptrend is likely to persist.
Relative to the S&P 500
Consumer Discretionary
The Consumer Discretionary sector continues to climb after breaking out at the 1,500 level and trades well above the 50-day moving average. Much of the move had been powered by TSLA, up over 50% since October 1st.
Relative to the S&P 500
Communication Services
The Communication Services sector remains below the declining 50-day moving average despite a broad rally in the equity market. Support is at the 265 level. Between this point and the moving average, the trend is neutral and uninteresting.
Relative to the S&P 500
Materials
The Materials sector is holding above the downtrend line and the 50-day moving average as it tries to break the consolidation that has been in place since May. For now, the bulls have a slight edge, but we want to see new highs before we can have confidence that a strong uptrend is in play.
Relative to the S&P 500
Financials
The Financials have begun to stall after a strong move to the upside that led to a breakout in October. Price and moving average support are in the 640 – 650 range; above these levels, the bulls are in control.
Relative to the S&P 500
Industrials
The Industrial sector continues to knock on the door of a breakout, but thus far, there has not been an answer. The index is above the 50-day moving average, so a slight edge belongs with the bulls. A break of support at 830 turns the trend bearish.
Relative to the S&P 500
Energy
Last week we highlighted that the Energy sector was extended from the 50-day moving average. The index has begun to take a breather after a strong run from the September lows. Support in the 410 – 420 zone remains the key level to watch; above that, the bulls have the ball.
Relative to the S&P 500
Consumer Staples
The Consumer Staples sector is holding price-based support and the 50-day moving average but remains in a consolidation. Above 730, the bulls have an edge, but the trend here is neutral.
Relative to the S&P 500
Real Estate
After a strong rebound, the Real Estate sector is running into resistance at the prior highs. Above the 50-day moving average and support at 290, the bulls are in charge, but we want to see a break to new highs to have confidence that this is not a slow topping process.
Relative to the S&P 500
Utilities
After a strong move from support in the 320 – 325 zone, Utilities are stalling at the 50-day moving average to remain in a broad, sloppy consolidation.
Relative to the S&P 500
Health Care
Health Care continues to heal. After holding support at 1,460, the group has moved through the 50-day moving average and is positioned to attack the prior highs.
Relative to the S&P 500
Take-Aways:
The three major markets in the U.S., the S&P 500, NASDAQ Composite, and Russell 2000, are trading at all-time highs. Joining the averages from the sector level are Technology, Discretionary, Financials. Energy remains strong, but it is hard to become excited about Materials and Industrials until we see some improvement. Defensive groups remain weak on a relative basis, a bonus for equity bulls. With stocks at all-time highs, it pays to follow the leaders.
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.