S&P 500 Sector Review

Fri, Oct 23, 2015 - 7:49am

It’s been a while since I’ve done a sector review so let’s see what’s performing.

The best looking sector is staples. Almost 84% of the holdings in the XLP are above their 200-day exponential moving average – which is to say that the participation in the latest advance is strong. Currently sitting at highs.

XLY - Discretionary stocks are back near resistance like the XLP. Breadth still needs some work though to confirm what’s going on in price with a break above 60% (currently 54.5%). We also need to see a better thrust in new highs, which is currently missing.

XLK - Technology stocks are at resistance, but that’s the last signal that needs to be confirmed. There’s a good amount of thrust here with a number of new highs within the index, as well as thrust in the amount of stocks above their 200-day exponential moving average above 60%. If the XLK breaks out to new highs, it will be confirmed by what I’m seeing today. There’s a gap up today in the XLK due to the market opening up higher. A bearish situation would arise if this gap closes and XLK trades back below 42.64.

XLF - Financials have been improving as well with a confirmed short-term reversal yesterday closing above 23.72. Breadth also continues to improve with 52% of the holdings sitting above their 200-day exponential moving average. There’s a small supply zone at 24.31 and an extreme supply zone at 25.50. There’s a nice new thrust in new highs.

XLI - Industrials is at a supply zone at $55 and there’s another at $58, but the sector ETF has confirmed a reversal by closing above 53.76 yesterday (blue oval). I still don’t see the kind of breadth that confirms the move yet, but there are positive developments here.

XTL - Telecom has reversed with a decent thrust in new highs recently.

XLB - Materials have confirmed a reversal if it can close today above 44.50. Other technicals look good but breadth is pretty narrow with very few new highs thrusting here and still low participation with only 43% of the index above their 200-day exponential moving average. However much improvement here technically.

XLU - Utilities have been volatile and need to breakout above $46 to confirm a new trend higher. Decent thrust in new highs this month and participation is strong with 80% of the index above its 200-day exponential moving average.

XLE - Energy still has much to work on. It is the deepest oversold group in the mix, but it is starting to improve. A bottom needs more time to develop technically. Breadth is horrible with 22% of the XLE trading below its 200-day exponential moving average.

XLV - Healthcare continues to show some deterioration. Technically things don’t look good still as the 50-day moving average continues to apply pressure on the way down. MACD is on a buy, but if it falls below 67.22 it may continue to underperform.

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Chief Executive Officer, Technical Analyst
ryan [dot] puplava [at] financialsense [dot] com ()