Edition 0013. 04.10.2022. Week of 04.04 - 04.10.2022.
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 5 of the 11 sectors closed with a gain, and all 5 of those outperformed SPY. The top performer was healthcare, followed by energy, staples, utilities, and then real estate. The two laggards were technology and discretionary. Utilities, staples, and healthcare closed at a new all-time high, while energy closed at a 52-week high. Notably, real estate closed at a 13-week high. There are no new lows. We saw the average distance from the last 52-week closing high fall from -6.76% to -7.17%.
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. XLP and XLV are now in 3rd and 4th position above 0 showing positive YTD gains.
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 lost 3.10% in value last week. It finished in 10th position and underperformed SPY. Price has closed below its downward sloping 40-week simple moving average. Momentum has flattened out 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 dragged down by its largest components including TSLA and AMZN. Aside from home improvement names, HD and LOW, and specialty retail names, mainly automotive parts, the sector was red. SBUX lost 10.90% in value last week. Price is in a downtrend.
Financials (XLF). Click to enlarge.
XLF lost 0.86% in value last week. It finished in 7th position and outperformed SPY. XLF closed below its upward sloping 40-week simple moving average. Momentum remains in a downtrend and is now just above its 0-line. Relative strength remains in its falling wedge below its falling 6-week moving average of its 40-week moving average of relative strength. XLF was dragged lower by its largest names, these are credit services and diversified banks including, V, MA, AXP, PYPL, JPM, BAC, and C. There was some buying in insurance names, but not enough to lift XLF as a while. Price remains rangebound as momentum and relative strength diminish.
Materials (XLB). Click to enlarge.
XLB lost 0.67% in value last week. It finished in 6th position and outperformed SPY. Price remains above its upward sloping 40-week simple moving average. Momentum remains above 0 and its average lines as it tests former support from below as resistance. Relative strength remains above its downward sloping 6-week moving average of its 40-week moving average of relative strength. RS has formed a rising wedge which generally has a bearish resolution. XLB had some strength in specialty chemical and agricultural input names such as CTVA, MOS, and SHW. That was not enough to life the sectors. Price remains rangebound.
Real estate (XLRE). Click to enlarge.
XLRE gained 0.79% in value last week. It finished in 5st position, again, and outperformed SPY. Price moved higher, closed above its upward sloping 40-week simple moving average, formed a doji candle, and recorded a 13-week closing high. Momentum is accelerating to the upside. Relative strength has followed through and remains above its almost year-long resistance level. It was industrial and specialty REITS that closed the sector higher including PSA, AMT, CCI, and SBAC. 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 gained 2.7% in value last week. It finished in 3rd place, again, and outperformed SPY. Price remains above its upward sloping 40-week simple moving average and recorded an all-time closing high. Momentum has turned up at is upward sloping trendline and is now testing its average line from below. Relative strength remains above very strong above its upward sloping 6-week moving average of its 40-week moving average of relative strength and closed at a multi-year high. Staples were strong across the board. More strength from WMT, COST, TGT which was up almost 11%, KO, PEP, MO, PM, ADM, LW, KHC, and K. Price is in an uptrend.
Healthcare (XLV). Click to enlarge.
XLV gained 3.45% in value last week. It finished in 1st position and outperformed SPY. Price has made an new all-time high above its upward sloping 40-week simple moving average. Momentum is accelerating to the upside and has broken above its downward sloping trendline from below. Relative strength remains strong and has closed at multi-year highs. Healthcare had a lot of participation last week. Drug manufactures, healthcare providers, medical devices, medical distribution, biotech, and diagnostics/research were all strong. Some of the largest gainers were PFE, UNH, ABBV, LLY, GILD, REGN, ZTS, and CAH. Price is now in an uptrend.
Utilities (XLU). Click to enlarge.
XLU gained 1.93% in value last week. It finished in 4th position and outperformed SPY. Price closed at an all-time high as it continued above its breakout level sharply. Momentum has made a new high with price. Relative strength has continued its upward trend and has broken above its previous resistance. Utilities were strong across the board, again, in diversified, electric, water, and gas names. EXC, SO, WEC, and CNP were some of the strongest 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 lost 1.75% in value last week. It finished in 8th position and underperformed 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 big names including Goog, FB, NFLX, and DIS were down, however the telecoms VZ, TMUS, and T were up. TWTR was up, too. XLC remains in a downtrend.
Energy (XLE). Click to enlarge.
XLE gained 3.21% in value last week. It finished 2nd position and outperformed SPY. Price remains well above its upward sloping 40-week simple moving average, and well 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. While some time below $80 might be good for the XLE, bulls are looking for a close above $80 and aiming for $101.50 which is the 2014 high. Momentum remains in an uptrend, while relative strength looks more short-term rangebound, but holding above prior resistance. XLE was strong in most industry groups. Some notable gainers were OXY, XOM, EOG, and HAL. XLE is in an uptrend.
Industrials (XLI). Click to enlarge.
XLI lost 2.52% in value last week. It closed in 9th position, again, and underperformed SPY. XLI closed below its downward sloping 40-week simple moving average, again. Momentum is negative but testing its downward sloping trend line from below while being below 0. Relative strength is failing and has broken below its 3-month upward sloping trendline. Its 6-week moving average of its 40-week moving average of relative strength continues sloping downwards. There was strength from staffing names, waste management names, and airlines. There was massive weakness in airlines, while railroads, integrated shipping, and industrial equipment were also weak. There was some strength from some aerospace and defense names, as well as waste management and staffing. Price remains rangebound.
Technology (XLK). Click to enlarge.
XLK lost 3.82% in value last week. It finished in 11th position and underperformed SPY. Price closed below its still upward sloping 40-week simple moving average. Momentum is negative. Relative strength has broken below its downward sloping trendline and below its still upward sloping 6-week moving average of its 40-week moving average of relative strength. The largest names, including MSFT, AAPL, and NVDA saw large losses. Just 4 names out of the 75 names closed higher last week. This included HPQ on the news that Uncle Warren was buying. 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 positive neutral trends increase as downtrend cap increased as well. At this point we have 33% in an uptrend, 28.75% in a down trend, and 38% in 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 and negative market cap decreased. At this point we have 26.50% with a positive momentum condition, 17.50% in a neutral condition, and 55.75% in a negative condition.
Last week we added 26.25% to the amount of cap making new all-time or 52-week closing highs.
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 increased to 57.25% while percentage with a falling moving average decreased to 42.50%.
Last week the percentage of SPY’s market cap in a subjective trend increased, while the subjective rangebound cap decreased, and subjective downtrend increased, At this point we have 30.25% in a subjective uptrend, 48.50% in a rangebound condition, and 21% of market cap in a subjective downtrend.
It is great news that we now have more market cap in uptrends than downtrend, though the issue is that is not true of momentum. While we have XLRE, XLP, and XLV, joining XLE making moves upward, unless we see more market cap with positive momentum conditions this might not be enough to hold SPY up.
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 utilities, staples, and materials. New 52-week high for materials, and all-time highs for utilities and staples.
Mid-caps have a positive YTD gain from energy, materials, and utilities. Energy closed at a new 52-week high.
Small-caps have a positive YTD gain from energy which closed at a 52-week high.
Large-caps have a YTD gain from energy, utilities, staples, and healthcare. All four of those sectors closed at all-time or 52-week highs.
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