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Key Points

  • Technology and Discretionary See Small Absolute Improvements
  • Communication Services has a Relative Breakdown
  • Financials are Fighting Relative Support
  • Energy Bulls Fight Off Their Backs
  • Health Care Continues to Lead

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Visiting the Sector Relatives

Information Technology

Last week, the Technology sector rallied with the broader market to recapture the 50-day moving average but remains below key resistance and the declining 200-day moving average. The improvement is notable but has not been enough to claim that the bulls have taken control of the match.

Relative to the S&P 500

The relative trend continues to build a base after moving above the 50-day moving average. Regaining and holding above resistance would be a bullish sign on a relative basis.

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

Consumer Discretionary

The Consumer Discretionary has regained the 50-day moving average, below the declining 200-day moving average, after holding support at the pre-COVID peak. Here too, the improvement is notable, but more needs to be done before the bulls take control.

Relative to the S&P 500

On a relative basis, Discretionary has been of late, moving above the 50-day moving average. However, the series of lower highs is still in place.

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

Communication Services

The bears remain in control of the Communication Services sector, with the group below the declining moving averages as well as the pre-COVID highs.

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 bears remain in control of the trend in the Materials sector as a countertrend rally plays out below the declining 50-day moving average, resistance, and the declining 200-day moving average.

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.

Copper / Gold chart for March 25th research.

Financials

Financials have held the pre-COVID highs and trade in a consolidation. The group is battling the declining 50-day moving average below resistance and the declining 200-day moving average.

Relative to the S&P 500

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

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

Industrials

Industrials have held support at the pre-COVID peak and are set to wrestle with the declining 50-day moving average; resistance near 830 lines up with the declining 200-day moving average, making it a key level for the bulls to surpass.

Relative to the S&P 500

The relative trend is below resistance and the declining 50-day moving average.

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

Energy

The Energy sector remains in a secular uptrend after standing its ground at the rising 200-day moving average. Retaking the 50-day moving average would set the stage for an attack on the recent highs.

Relative to the S&P 500

The relative trend remains under pressure, below support, 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 are stuck in a consolidation zone and between the moving averages. The trend is neutral, and there is not a lot to get excited about.

Relative to the S&P 500

The relative trend is consolidating around the 50-day moving average. Equity bulls want to see a break lower as confirming data point to some of the improvements that we have been highlighting for the broader market.

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

Utilities

Utilities remain in a sloppy sideways consolidation as they fight with the 50 and 200-day moving averages.

Relative to the S&P 500

The relative trend is breaking down below the rising 50-day moving average. A continuation to the downside would be a welcome development for equity bulls.

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

Health Care

The Health Care group is holding above support and doing battle with the moving averages. The trend is neutral.

Relative to the S&P 500

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

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

Real Estate

Real Estate has reclaimed broken support and the 50-day moving average while holding below the declining 200-day moving average. There is still a lot of work to do before the bulls are in control.

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

As we have noted for the broader market, there have also been near-term improvements at the sector level, putting the bulls in a position to take control. The question is will they capitalize or drop the ball as they have done a few times in 2022.

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