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The Sector Inspector. Week 12.

Edition 0011. 03.26.2022. Week of 03.21 - 03.27.2022.


This is the weekly commentary that examines all 11 S&P sectors. We first analyze the large cap sectors in depth. We look at price, trend, relative strength, and momentum. Then we check in on the sectors in the mid-cap, small-cap, and equally-weighted large cap spaces.

 

S&P 500 Large-Cap Sectors.

Sector Performance Table. Sorted by 1-week rate-of-change.


Click here for the performance table guide. Click the performance table to enlarge.

Last week 9 of the 11 sectors closed with a gain, while outperformed SPY. The top performer was energy, followed by materials, and then utilities. The two laggards were real estate and healthcare. Energy closed at a 52-week high. Utilities closed at an all-time high. While many sectors have price action that is improving, quantitatively, it is only energy and utilities that have both a positive trend and momentum condition.


Sector performance sorted by the year-to-date rate-of-change.


Click here for the performance table guide. Click the performance table to enlarge.


Year-to-date sector and SPY performance. Click to enlarge.

Last week we has utilities and financials join energy and close above the 0-line. XLE is up 49.89% YTD. XLU is up 1.68% YTD, and XLF is up 1.20% YTD.


Sector Charts!

Cyclical sectors: sectors that tend to lead as the economy expands and lag as

the economy contracts.


Consumer Discretionary (XLY). Click to enlarge.

XLY finished in 9th position. It underperformed SPY and recorded a 4-week closing high. The 40-week simple moving average is undecided as it fluctuates between turning up and down. Momentum is decelerating below its 0-line. Relative strength is in a down trend. Price is rangebound. XLY was led by TSLA which gained 11.63% on the week and AMZN which gained 2.19%.


Financials (XLF). Click to enlarge.

XLF finished in 6th position. It underperformed. XLF has closed again above its still upward sloping 40-week simple moving average. Momentum has turned up right above its 0-line though remains below its downward sloping trendline. Relative strength remains in its falling wedge with price above its 40-week simple moving average but below its downward sloping trendline. XLF remains rangebound. XLF saw a strong performance from the insurance groups as well as the regional and diversified bank groups. BRK.B was up 4.78%.


Materials (XLB). Click to enlarge.

XLB finished the week in the 2nd position and outperformed SPY. Price remains above its flat 40-week simple moving average. Momentum has breached its 0-line, though turned up and is testing its average line from below. Relative strength remains above its downward sloping 40-period simple moving average and below its upward sloping trending. Price remains rangebound. XLB was strong across the groups space. Chemicals, agriculture, and materials were all strong.


Real estate (XLRE). Click to enlarge.

XLRE finished in 10th position and underperformed SPY. Price remains barely above its still upward sloping 40-week simple moving average. Momentum has turned up right at its 0-line. Relative strength is below its upward sloping 40-week simple moving average but above its upward sloping trendline. XLRE remains rangebound. The largest companies in the sector were down, but healthcare and retail REITS were strong enough to buoy the sector.


Defensive sectors: sectors that provide goods & services that people require

in both economic expansions and contractions.


Consumer Staples (XLP). Click to enlarge.

XLP finished in 7th place and underperformed SPY. Price remains above its upward sloping 40-week simple moving average but remains in its ascending triangle. Momentum is testing its upward sloping trendline from above, as is relative strength. XLP is rangebound. Lots of strong names in this sector last week. KO was up 2.38%. MO was up 3.75%. ADM was up 11.35%. All of the packaged food companies such as K, GIS, and KHC were up. Household names like PG and CL were also up.


Healthcare (XLV). Click to enlarge.

XLV finished last week in 11th position and underperformed SPY. Price remains above its still upward sloping 40-week simple moving average. Momentum has turned up at its 0-line though remains below its average and its downward sloping trendline. Relative strength remains strong just down from a 7-month high. Price remains rangebound. XLV has some strong names including MRK, BMY, ABBV, and UNH.


Utilities (XLU). Click to enlarge.

XLU finished the week in 3rd place and outperformed SPY. Now joining the Dow Utility Average, price has closed above its pre-covid price levels and notched an all-time closing high. Momentum while positive, unfortunately has not confirmed the new high. Relative strength is testing its upward sloping trendline from above and its remains above its now upward sloping 40-week simple moving average. Price is in an uptrend. XLU was strong across the board with gas, electric, and diversified names showing strength.


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). Click to enlarge.

XLC finished in 5th position, again, and underperformed SPY. The tweezers engulfing was confirmed with last week’s candle closing higher. Price is in a downtrend, but due for some mean reversion. Momentum remains strongly negative though has decelerated and moving up to test its downward sloping trend line and average line. Relative strength has flattened a little, but it continues to make multi-year lows. XLC had its biggest players perform with GOOG gaining 3.45% and FB gaining 2.46%


Energy (XLE). Click to enlarge.

XLE finished the week in 1st position outperforming SPY. Price remains above its upward sloping 40-week simple moving average and above its 61.8% retracement level from its 2014 highs down to the 2020 Covid lows. $101.50 is the 2014 high. Momentum and relative strength are strong. XLE is in an uptrend. Energy was up across the board.


Industrials (XLI). Click to enlarge.

XLI closed last week in 8th position and underperformed SPY. XLI closed back above its downward sloping 40-week simple moving average. Momentum is negative and testing its downward sloping trend line from below while below 0. Relative strength has been strong since January and is testing its downward sloping 40-week simple moving and its upward sloping trendline from late December 2021. Price remains rangebound. Performance in the industrial groups was mixed. Railroads, farm/heavy equipment, and aerospace/defense names led.


Technology (XLK). Click to enlarge.

XLK finished in 4th position last week and outperformed SPY. The bullish tweezers engulfing was confirmed with last week’s candle closing with a gain. Price is just below its still upward sloping 40-week simple moving average. Momentum is negative but has decelerated. Relative strength has broken above its downward sloping trendline but remains below its flat 40-week simple moving average. Price remains rangebound. The tech groups were strong with AAPL gaining 6.55%, NVDA gaining 3.68%, INTC gaining 9.20%, AMD gaining 5.47%, and MSFT gaining 1.08%.

 

Sector Summary Table. Click to enlarge.

Last week the amount of market cap that is in a quantitatively positive trend increased from 40.50% to 51.25% as XLI and XLB flipped from neutral to positive. Neutral decreased from 50.25% to 39.75%. The negative market cap stayed the same. XLB’s momentum changed from negative to neutral, so that accounts for the change in momentum numbers. The subjective numbers changed since I have switched XLU from range to uptrend and XLY from a downtrend to a rangebound condition.


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. Sorted by 1-week rate-of-change.


Click here for the performance table guide. Click the performance table to enlarge.

Positive this YTD in the equally weighted large-caps sectors are energy, followed by growing gains from materials, utilities, and financials.


Mid-caps see a positive YTD gain from energy and materials with a tiny gain financials.


Small-caps have a positive YTD return from energy and a small return from materials.


Large-caps, you should know the story. Gains from energy with now small gains from utilities and financials.

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