Edition 0012. 04.02.2022. Week of 03.28 - 04.03.2022.
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 7 of the 11 sectors closed with a gain, and all 7 of those outperformed SPY. The top performer was energy, followed by real estate, utilities, staples, and then healthcare. The two laggards were energy and financials. Utilities closed at a new all-time high, while real estate and healthcare closed at 13-week highs. There are no new lows. We see an improvement in the average distance from the last 52-week closing high which is now 6.76%, up from 6.90%.
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.
The leadership remains the same as two weeks ago with XLE and XLU remaining in 1st and 2nd positions. Two weeks ago XLF closed in positive territory, however last week it declined sharply and is now below 0 in 6th position. XLP is now in 3rd position, though below 0% for its year-to-date change.
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 5th position. It outperformed SPY and recorded a 4-week closing high. Price has closed below its upwards sloping 40-week simple moving average. Momentum is accelerating to the upside below its 0-line. Relative strength remains in its downtrend below its downward sloping 6-week moving average of its 40-week moving average of relative strength. XLY was led by again by TSLA which gained 7.32% on the week. We also had gains from McDonald’s and Starbucks, as well as travel names including Booking Holdings and the cruise lines. Price is rangebound.
Financials (XLF). Click to enlarge.
XLF finished in 11th position. It underperformed SPY. XLF has closed below its upward sloping 40-week simple moving average. Momentum accelerated, mildly, down towards its 0-line. Relative strength remains in its falling wedge below its 6-week moving average of its 40-week moving average of relative strength. XLF had some buyers last week in insurance names and some in credit services names including Visa, Mastercard, and PayPal, but that was not enough to offset the large losses in large banks, regional banks, and capital market names such as Schwab and Morgan Stanley. XLF remains rangebound.
Materials (XLB). Click to enlarge.
XLB finished the week in the 8th position and underperformed SPY. Price remains above its upward sloping 40-week simple moving average. Momentum has remounted its 0-line, but is testing overhead resistance from below. Relative strength remains above its downward sloping 6-week moving average of its 40-week moving average of relative strength and it remains below its upward sloping trending. XLB had some strength in specialty chemical names, but its was not enough to offset the losses in copper, building materials, and agricultural names. Price remains rangebound.
Real estate (XLRE). Click to enlarge.
XLRE finished in 1st position and outperformed SPY. Price moved strongly above its upward sloping 40-week simple moving average and closed at a 13-week high. Momentum is accelerating to the upside and now above its 0-line. Relative strength has broken above its almost year-long resistance. Real estate bulls want to see follow through here in relative strength. Real estate was strong across the board including specialty, industrial, residential, office, healthcare, and hotel/motel REITS. Price remains rangebound.
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 3rd place and outperformed SPY. Price remains above its upward sloping 40-week simple moving average and has broken above its descending triangle. A measured move suggests a price target of $81.50. Momentum looks to have turned up at is upward sloping trendline. Relative strength remains in its range with an upward sloping 6-week moving average of its 40-week moving average of relative strength. Staples were strong with Walmart gaining 5.27%, Costco gaining 3.57%, Kimberly-Clark gaining 3.95%, Mondelez up 3.27%, and Philip Morris up 3.56%. Price is in an uptrend.
Healthcare (XLV). Click to enlarge.
XLV finished last week in 4th position and outperformed SPY. Price remains above its still upward sloping 40-week simple moving average and closed at a 13-week high. Momentum is accelerating to the upside, and is testing its downward sloping trendline from below. Relative strength remains strong and has confirmed previous resistance as support. Healthcare had a lot of strength from biotech names, medical devices names, diagnostics /medical instrument and supply names. Price remains rangebound.
Utilities (XLU). Click to enlarge.
XLU finished the week in 2nd position and outperformed SPY. Now joining the Dow Utility Average, price has followed through above its pre-covid price levels and notched an all-time closing high. A measured move suggests a target of $100. Momentum has made a new high with price. Relative strength has continued its upward trend from its upward sloping trendline. Utilities were strong across the board in diversified, electric, water, and gas names. XLU is in an uptrend.
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 6th position outperformed SPY. Price remains below its downward sloping 40-week simple moving average. Momentum and relative strength are peaking above their downward sloping trendlines. It would not be surprising to see continued mean reversion from XLC. The sector only gained 0.16% on the week, and that makes sense because some of the largest names including Alphabet and Disney were down, while others including Meta Platforms, T-Mobil, and Verizon were up. Price remains in a downtrend.
Energy (XLE). Click to enlarge.
XLE finished the week in 11th position underperformed 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. Price is stretched from its moving average, but that does not imply a direction. $101.50 is the 2014 high. Momentum remains in an uptrend while relative strength looks more rangebound but holding above prior resistance. The only strength was in oil & gas refining names such as Marathon Petroleum, Phillips 66, and Valero. XLE is in an uptrend.
Industrials (XLI). Click to enlarge.
XLI closed last week in 9th position and underperformed SPY. XLI closed back below its downward sloping 40-week simple moving average. Momentum is negative and testing its downward sloping trend line from below while it is itself below 0. Relative strength has been strong since January and is testing its upward sloping trendline from late December 2021. Its 6-week moving average of its 40-week moving average of relative strength continues to slope downwards. There was strength from staffing names, waste management names, and airlines. There was massive weakness in railroads, integrated shipping, and farm/heavy equipment. Price remains rangebound.
Technology (XLK). Click to enlarge.
XLK finished in 7th position and outperformed SPY. Price is just below its still upward sloping 40-week simple moving average. Momentum is negative but has turned up towards its 0-line and average line. Relative strength has broken above its downward sloping trendline but remains below its upward sloping 6-week moving average of its 40-week moving average of relative strength. Software names were strong while semiconductors and hardware were weak. Price remains rangebound.
Sector Summary Table.
Click to enlarge.
Source for current weights: https://www.sectorspdr.com/sectorspdr/
Sector Summary Table Changes.
Click to enlarge.
Last week from a quantitative perspective we saw the percentage of SPY’s market cap in a positive trend decrease, while rangebound and negative trends gained in market cap. This was caused by XLI shifting from a positive to a negative trend, while XLF shifted from a positive to a neutral trend.
Last week from a quantitative perspective we saw the percentage of SPY’s market cap with a positive momentum condition increase, while the neutral market cap decreased, and negative market cap remained the same. XLB and XLV shifted their momentum conditions from neutral to positive.
Last week there was no shift in the percentage of SPY’s market cap at new 52-week highs or 52-week lows.
Last week the percentage of SPY’s market cap with a rising 6-week moving average of a 40-week moving average of relative strength decreased while the percentage with a falling moving average increased. The moving average of relative strength on XLF turned down.
Last week the percentage of SPY’s market cap in a subjective trend increased, while the subjective rangebound cap decreased, and market cap in a subjective downtrend remained the same. The change was in XLP. It was upgraded from from rangebound to uptrend.
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 have a positive YTD gain from energy, materials, and utilities.
Small-caps have a positive YTD gain from energy and materials.
Large-caps have a YTS gain from energy and utilities.
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