fbpx

Key Points

  • Materials Finds Footing
  • Energy Holds The Line – For Now
  • Consumer Staples Eyes a 50/200-Day Death Cross
  • Utilities Break Out on an Absolute and Relative Basis
  • Health Care Recaptures the 50-Day Moving Average to the Upside

This daily note IS brought to you by Research by Potomac. Access the full Advisor toolkit and get a deeper look at the markets.

Visiting the Sector Relatives

Information Technology

The Technology sector once again finds itself struggling with the September 2020 highs as resistance around the 2,230 zone after breaking down below this level late last week.

Relative to the S&P 500

On a relative basis, the group continues to trade in a compression below a declining trendline and horizontal relative support at the highlighted zones, fighting with the ratio’s flat 50-day moving average.

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

Consumer Discretionary

The Consumer Discretionary sector has held support in last week’s trading session at the pre-COVID highs of 1,050 below declining 50 and 200-day moving averages.

Relative to the S&P 500

In a risk-off move, the group has declined from long-term resistance below the ratio’s declining 50-day moving average.

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

Communication Services

Communication Services have sliced through the pre-COVID highs to the downside at the 190 zone in last week’s trading session below declining 50 and 200-day moving averages.  

Relative to the S&P 500

The relative performance of this sector continues to falter, trading below the falling trendline and testing the ratio’s flat 50-day moving average from above.

Lumber / Gold chart for March 25th research.

Materials

Materials have found long-term support at the 450 zone after yet another selloff below the declining 50 and 200-day moving averages.

Relative to the S&P 500

The group is testing a long-term zone of relative support below the ratio’s declining 50-day moving average. Note that this zone is one in which the group has struggled with in the past, and bulls will look for this level to hold to the upside for early signs of potential trend reversal.

Copper / Gold chart for March 25th research.

Financials

Financials continue to test the pre-COVID highs at the 520 zone below declining 50 and 200-day moving averages. Investors keenly await further direction from this zone.

Relative to the S&P 500

It was another week of the same relative price action for the group, testing the lower bound of the relative trading range that’s plagued Financials since the beginning of 2021.

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

Industrials

Industrials are hovering above support at the pre-COVID highs at the 720 zone on a small display of strength over the past week.

Relative to the S&P 500

On a relative basis, the group remains an in-line performer at best, fighting with the ratio’s flat 50-day moving average and remaining below relative resistance at the highlighted zone.

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

Energy

It was a tense session for the Energy bulls over the last week as the group found footing and held the 540 zone to the upside below a declining 50-day moving average.

Relative to the S&P 500

The group retains ground above long-term relative support at the highlighted zone but has sold off from the ratio’s flat 50-day moving average. Bulls will look for the ratio’s 50-day moving average to be recaptured to the upside to have confidence in leadership from this sector.

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

Consumer Staples

The Consumer Staples sector has rallied over the past week, displaying strength below the major moving averages. The declining 50-day moving average is close to crossing below the flat 200-day moving average, a development that investors will be keeping an eye on in the coming weeks.

Relative to the S&P 500

On a relative basis, the group continues to remain an outperformer as the ratio trades above its rising 50-day moving average.

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

Utilities

Utilities have rallied through the pre-COVID highs as well as the declining 50-day moving average in last week’s trading session and remains the only sector in the S&P 500 to close above both the 50 and 200-day moving averages for now. 

Relative to the S&P 500

The group continues its streak of outperformance in breaking above relative resistance at the highlighted zone above the ratio’s rising 50-day moving average.

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

Health Care

The Health Care sector continues to rally above the 1,450 zone and has recaptured the declining 50-day moving average to the upside, with the flat 200-day moving average at the 1,535-zone set in its sights.

Relative to the S&P 500

On a relative basis, the group continues to be an outperformer, trading above the highlighted long-term breakout zone and the ratio’s rising 50-day moving average.

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

Real Estate

The Real Estate sector is testing the pre-COVID highs from below at the 260-zone after a paltry upside breakout attempt early last week. The price action takes place below declining 50 and 200-day moving averages and should be a key zone for the sector in the coming weeks.

Relative to the S&P 500

The group continues to be an in-line performer at best, trading in a relative sideways patter and fighting with the ratio’s declining 50-day moving average.

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

Take-Aways

The price action across the S&P 500 sectors over the past week can largely be described as “risk-off”. Relative leadership within Utilities, Consumer Staples, and Health Care suggest an unwillingness on the part of investors to take on more risk in this environment. The former darling, Energy, is at key levels on an absolute and relative basis, and price action around these could be the key to maintaining the long-term uptrend.

If you enjoy reading this Daily Note and would like to go deeper, Research by Potomac features a monthly chart book, sector deep dives, intermarket analysis, and more. Click here to start a Free 30-Day Trial.

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.