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Take-Aways:

On an absolute basis, sector trends have improved across the market. On a relative basis, the leaders that we have been highlighting for the past few weeks have maintained their positions. Energy, Health Care, Industrials, and Financials are the focus. Offensive groups such as Technology, Discretionary, and Communication Services still have a lot of work to do. Defensive groups are mixed.  

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Visiting the Sector Relatives

Information Technology

Technology has continued to rally beyond the 50-day moving average after regaining broken support. There is room to the declining 200-day moving average which must be overcome if we are going to begin to make a stronger bull case.

Relative to the S&P 500

The relative trend is testing the declining 50-day moving average and resistance. We find it hard to argue for leadership here.

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

Consumer Discretionary

The Consumer Discretionary sector is testing the declining 50-day moving average below the declining 200-day moving average. There is a clear level of support near 1,050 that can be used by aggressive investors who are trying to catch a turn, but there is still a lot of work to do before this trend can be considered bullish.

Relative to the S&P 500

On a relative basis, Discretionary is testing cycle lows below the declining 50-day moving average.

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

Communication Services

The Communication Services sector remains below price-based resistance (now at 174) as it spars with the declining 50-day moving average. The group is below the declining 200-day moving average as it continues a trend of lower highs and lower lows.

Relative to the S&P 500

The relative trend is below the 50-day moving average, trading near all-time lows.

Lumber / Gold chart for March 25th research.

Materials

The Materials sector has powered through the 200-day moving average while the 50-day moving average is beginning to turn higher. The move has taken the group into the 2021-2022 consolidation/topping zone. Above 500, there is room to 570. 

Relative to the S&P 500

On a relative basis, the group has blasted through the 50-day moving average, which is now moving higher. Above the moving average, the group has leadership potential.

Copper / Gold chart for March 25th research.

Financials

After retaking the 50 and 200-day moving averages, Financials have one more hurdle to overcome before the bearish-to-bullish reversal is complete. A move above 600 could set the stage for a run to the highs.

Relative to the S&P 500

On a relative basis, the ratio is testing cycle highs above support and the rising 50-day moving average. A break above the highs argues for continued leadership.

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

Industrials

Industrials have rallied through the 200-day moving average and the 50-day moving average has turned higher in the near-term. The group is set to do battle with the 2021-2022 consolidation/topping zone. Above 800, there is room to 900.  

Relative to the S&P 500

The relative trend is bullish but extended above the rising 50-day moving average.

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

Energy

There is not much to add for the Energy sector. The group is in an uptrend above the rising 50 and 200-day moving averages. Price made a new high yesterday.

Relative to the S&P 500

The group remains a leader with the ratio trading near the highs above the 50-day moving average.

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

Consumer Staples

Consumer Staples stocks are testing the flat 200-day moving average above a rising 50-day moving average. A Neutral trend.

Relative to the S&P 500

The relative trend remains in a near-term consolidation but is holding above support and the rising 50-day moving average.

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

Utilities

Utilities remains in a choppy/sloppy consolidation. The group is above support and between the moving averages. There is not a clear directional bias at this time.

Relative to the S&P 500

The relative trend remains below the declining 50-day moving average. Odds favor this former leader shifting into a lagging position.

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

Health Care

Health Care is holding above the 50 and 200-day moving averages but must overcome 1,570 for a stronger bullish case to be made.

Relative to the S&P 500

The relative trend remains bullish and the pullback to the rising 50-day moving average presents an opportunity with a clearly defined risk level.

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

Real Estate

Real Estate has retaken the 50-day moving average after holding support. There is room to the declining 200-day moving average is the group can get above 245. 

Relative to the S&P 500

On a relative basis, the group remains in a bearish trend below the declining 50-day moving average.

Growth vs Value (Large Cap) chart for March 25th research.
Beginning Monday, November 21st, all Research by Potomac content will be moving inside our platform. To continue receiving our Daily Note, and view all the content we produce each month, please signup for a free trial.

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