Edition 0009. 03.12.2022.
This is the weekly commentary that reviews all 11 sectors that form the S&P 500 ETF, SPY. We are looking at performance, trend, relative strength, and momentum.
We start with performance tables that allow us to track how the symbols have performed over several rolling periods of time. We can see New high/low details, as well as determine trend and momentum using quantitative measures. Here are a few notes to help you interpret the tables.
They are grouped first by family, and then sorted by performance.
Quantitatively, the general trend is determined by price in relation to its 40-week simple moving average. 1 means the trend is up. 2 means the trend is vulnerable. 3 means the trend is down.
1 = close is above the ma and the ma is up.
2 = close is below the ma and the ma is up, close is above a flat or ma that is down.
3 = close is below the ma and the ma is down.
Quantitatively, the general momentum condition is determined by a 12,26,09 Price Percentage Oscillator – think MACD. 1 means the momentum condition is positive. 2 means the momentum condition is positive but decelerating. 3 means the momentum condition is negative but decelerating. 4 means the momentum condition is negative.
1 = the oscillator is above 0 and the histogram is above 0.
2 = the oscillator is above 0 but the histogram is below 0
3 = the oscillator is below 0 but the histogram is above 0.
4 = the oscillator is below 0 and the histogram is below 0.
The ranking of closing highs and lows is as follows:
1 = 4-week closing high or low.
2 = 13-week closing high or low.
3 = 52-week closing high or low.
4 = all-time closing high or low.
The 40-week SMA of relative strength to SPY is as follows:
1 = 40-week SMA is up.
2 = 40-week SMA is same.
3 = 40-week SMA is down.
Sector Performance Table.
Sector performance table sorted by the 1-week rate-of-change.
The only medal we are awarding this week is the gold medal. This goes to XLE which gained 2.15% in value. 7 of our 11 sectors outperformed SPY, by falling less, while 4 sectors underperformed SPY. Surprisingly, the losses were led by consumer staples. 8 sectors closed at 13 or 52-week lows while energy closed at a 52-week high. The quantitative momentum of XLU has turned positive, and so XLU joins XLE with both a quantitatively positive trend and momentum condition.
Sector performance sorted by the year-to-date rate-of-change.
Relative performance chart. This shows the year-to-date performance of the sectors and SPY.
The YTD picture remains largely the same. XLE is leading the pack, while the rest of the sectors remain negative with the largest losers being comm services, tech, and discretionary.
Sector Charts
Cyclical sectors: sectors that tend to lead as the economy expands and lag as
the economy contracts.
Consumer Discretionary (XLY)
XLY finished in 8th position, again, and underperformed SPY. Price made a new 13-week closing low as price closed again below its downward sloping moving average. Price remains under the October 2021 low but above the May 2021 lows. Momentum continues to accelerate to the downside. Relative strength is holding below horizontal support while below its downward sloping 40-week simple moving average of RS. Price is in a downtrend.
Financials (XLF)
XLF finished in 5th position. It outperformed SPY but registered a new 13-week closing low below its now downward sloping 40-week simple moving average. Price has fallen below $37. $35 is the next level to watch which marks the mid-2021 price lows. Momentum continues to accelerate to the downside as momentum races towards its 0-line from above. Relative strength found support at its 40-week simple moving average. Price remains rangebound above $35.
Materials (XLB)
XLB finished the week in the 3rd position and outperformed. The last 7 weeks has given us nothing but doji type candles which have all closed below a now downward sloping 40-week simple moving average. Price remains above $78 which marks the September 2021 swing lows. Price has closed at a new 13-week low. Momentum has now turned negative with a cross below its 0-line. Relative strength is testing its upward sloping trend from below. RS remain tentatively above its down sloping 40-week simple moving average. Price remains rangebound.
Real estate (XLRE)
Real estate finished the week in 4th position and outperformed SPY. Price closed below its still upward sloping 40-week simple moving average. Momentum continues to decelerate just below its 0-line. Relative strength had a solid week and closed above a confluence of previous resistance. XKLE is rangebound.
Defensive sectors: sectors that provide goods & services that people require
in both economic expansions and contractions.
Consumer Staples (XLP)
XLP finished in 11th place underperforming SPY. Last week saw a lot of selling pressure as price closed below its upward sloping 40-week simple moving average at the bottom of a marabou candlestick. Momentum accelerated below its average line, though is still above its rising trendline. Relative strength fell through its upward sloping trendline though is above its rising 40-week simple moving average. XLP is rangebound.
Healthcare (XLV)
Healthcare finished the week in 7th place and outperformed SPY. Price closed below its upward sloping 40-week simple moving average. Momentum accelerated further down towards its 0-line. Relative strength was flat least week, though remans above its upward sloping 40-week simple moving average. Price is rangebound.
Utilities (XLU)
XLU finished the week in 2nd place, again, and outperformed SPY. Unlike the Dow Utility Average, price has not closed above its pre-covid price levels. Price remains rangebound until it closes above $72. Momentum is positive as the oscillator line breaks above its average line from below. Relative strength is breaking back above its upward sloping trendline and now upward sloping 40-week simple moving average.
Sensitive sectors: sectors that rise and fall with the general economy, but at
the same time have a sensitivity to additional factors.
Communication Services (XLC)
XLC finished in 9th position, again, and underperformed SPY. Price remains below its 38.2% Fibonacci retracement level from the 2020 Covid-lows to the September 2021 peak. Price closed at a new 52-week low. Momentum remains strongly negative. Relative strength continues to make multi-year lows. XLC is in a downtrend. Will buyers step in around $63.50?
Energy (XLE)
XLE finished the week in 1st position, again, well above its upward sloping 40-week simple moving average, and printed a new 52-week closing high. Price has now broken above the 61.8% Fibonacci retracement level from the 2014 highs to the 2020 Covid lows. Momentum and relative strength are strong. XLE is in an uptrend.
Industrials (XLI)
XLI closed last week in 6th position and outperformed SPY. XLI closed below its downward sloping 40-week simple moving average. Moment is negative. Relative strength has been strong since January and is above its downward sloping 40-week simple moving average from below. Price remains rangebound.
Technology (XLK)
XLK finished in 10th position again last week, and underperformed SPY. Price closed below its still upward sloping 40-week simple moving average to print a 13-week closing low. Momentum is negative and accelerating. Relative strength continues down below its upward sloping 40-week simple moving average. Price remains rangebound above the lower shadow of the February candlestick.
Sector Summary Table
Last week in quantitative trends, we saw market cap in positive trends jump up from 26.75% to 7% while market cap of negatives trends increased from 42.75% to 49.25% as XLV turned from positive to neutral and XLP turned from positive to negative. For momentum, we saw positive cap gain from 4% to 7% while negative momentum changed from 58.75% to 61.50% of market cap. This was caused by XLU turning from neutral to positive and ZLRE turning from neutral to negative. My subjective trend analysis has less market cap in an uptrend and less in a down trend with much more cap rangebound.
Source for current weights: https://www.sectorspdr.com/sectorspdr/
Weighted Sectors Across The Cap Scale
& Equally Weighted Large Caps
This table is sorted by Year-to-Date performance
The equally weighted sectors are down the least this YTD with energy in the green and closed at a 52-week high. Utilities are attempting to turn its YTD gain positive as its quantitative trend and momentum measures are now both positive.
Small-caps are down just more than the equally weighted sectors. Energy is the only positive sector YTD and closed at a 52-week high.
Mid-caps are the 3rd worst performers YTD. Energy is positive YTD and closed at a 52-week high.
Large-caps are the weakest of the cap-tiers. Energy is positive YTD and closed at a 52-week high. Utilities are now in a positive quantitative trend and momentum condition as in the equally weighted sectors.
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