Key Points
- Growth Sectors Leave Bullish Hammers in Place, Tradable Lows?
- Cyclicals Are Battling Support at Breakout Levels
- Defensive Groups Are Testing Support
- Energy Rebounds to New Highs
- Health Care Moves to a Neutral Stance
Visiting the Sector Relatives
Information Technology
The bears have tried to take the upper hand in the Technology space, but the bulls are fighting hard. Important support at the 2,900 level was breached yesterday before a late rally pushed back above, leaving a large “hammer” candle on the chart. The index remains below the 50-day moving average, putting the burden of proof on the bulls in the near term.
Relative to the S&P 500
Consumer Discretionary
The Consumer Discretionary is in the process of testing the risk management level that we highlighted last week, near 1,560, but a late rally has kept the bulls in the match. We can’t rule out a rebound to retest the 50-day moving average.
Relative to the S&P 500
Communication Services
The Communication Services sector also used a late rally to close near the top of its trading range yesterday but remains below the broken support and the declining 50-day moving average. The group remains one of the worst trends in the market, but we are open to a near-term bounce that brings the moving average into play.
Relative to the S&P 500
Materials
Materials are testing the 560-breakout level and the rising 50-day moving average. This sets up a straightforward scenario. Above 560, the bulls are in control. Below that level, risk should be managed. Odds favor a continuation to the upside, however, as the group has been making higher lows of late.
Relative to the S&P 500
Financials
The upside that was hinted at last week came to fruition this week as the Financials have broken to new highs above the 670 level. The 50-day moving average is turning highs, and the bulls are in control for now and until the price is below 650.
Relative to the S&P 500
Industrials
The Industrial sector can’t catch a break(out). After another false move above resistance, the group has fallen back into the consolidation zone. So far, the 50-day moving average is acting as support, and the bulls retain the benefit of the doubt, but there are better trends out there.
Relative to the S&P 500
Energy
The Energy sector has broken to new highs, in line with the view that we expressed last week. Above 450, the bulls are in control and will remain in control until 425 is broken. The 50-day moving average is turning higher as well.
Relative to the S&P 500
Consumer Staples
The bulls remain in control in the Consumer Staples sector. The only knock that we have is that the index remains extended above the 50-day moving average. Short-term support is near 795, while stronger support is at 760.
Relative to the S&P 500
Utilities
Utilities are holding above the breakout level after reaching new highs. Near-term support is near 355, being tested now. The 50-day moving average is rising and above the key 345 level that we have highlighted. Above this mark, the bulls are in control.
Relative to the S&P 500
Health Care
Health Care moves into the neutral camp, between support and resistance and dancing with the 50-day moving average.
Relative to the S&P 500
Real Estate
Real Estate has pulled back to test support and the 50-day moving average. The hammer candle yesterday shows us that the bulls are not ready to give up control yet. Above 295, they retain the benefit of the doubt.
Relative to the S&P 500
Take-Aways:
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