Key Points
- Growth Sectors Look to Hold Support Levels
- Discretionary Has Room to Pre-Covid Highs
- Cyclicals are in Consolidation Zones, Showing Better Relative Strength
- Energy Trades New Near Cycle Highs
- Defensive Groups Are Mixed
Visiting the Sector Relatives
Information Technology
The Technology sector remains below broken support (now resistance?) at the 2,500 level and the declining 50 and 200-day moving averages. The series of lower lows and lower highs from the early 2022 peak were kept in place on Friday. The bears remain in control of the trend.
Relative to the S&P 500
Consumer Discretionary
The Consumer Discretionary sector traded to a new cycle low last week and now has the pre-COVID highs in sight to the downside. The group is below the declining 50 and 200-day moving averages.
Relative to the S&P 500
Communication Services
Communication Services stocks continue to hold support at the pre-COVID highs for now. However, the index remains below the declining 50 and 200-day moving averages, keeping the bears in control of the trend.
Relative to the S&P 500
Materials
The Materials sector is trading in a clearly defined range but remains below the 50 and 200-day moving averages. The trend is neutral, with a slightly bearish bias.
Relative to the S&P 500
Financials
Financials are trading in a consolidation zone, with support at the pre-COVID highs. The group is below the declining 50 and 200-day moving averages, keeping the bias to the downside for now.
Relative to the S&P 500
Industrials
Industrials are stuck in a consolidation zone below the 50 and 200-day moving averages. Resistance is near 830 (lines up with the 50-day moving average), and support comes into play near 760. Below 760, the pre-COVID highs are likely to be tested.
Relative to the S&P 500
Energy
The Energy sector is threatening a break to new highs for the cycle, trading above the 50 and 200-day moving averages. The bulls remain in control of the trend, and there is support near 590.
Relative to the S&P 500
Consumer Staples
The Consumer Staples sector has come under intense pressure in the near term, thanks in part to a poorly received earnings report from WMT. The group has moved below the 50 and 200-day moving and will now have to work to repair the technical damage that has been done.
Relative to the S&P 500
Utilities
Utilities have regained broken support and will now look to move above the 50-day moving average to reestablish a bullish trend. The rising 200-day moving average keeps the bulls in control of the long-term trend.
Relative to the S&P 500
Health Care
The Health Care sector continues to rebound from support but remains below the 50 and 200-day moving averages. The trend is neutral with a bearish bias until the moving averages are breached to the upside.
Relative to the S&P 500
Real Estate
Real Estate continues to hold support at the pre-COVID highs while remaining below the declining 50 and 200-day moving averages. The bears keep the ball until there is proof that a rally is taking hold.
Relative to the S&P 500
On a relative basis, the group is below resistance and the 50-day moving average.
Take-Aways:
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