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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.