Edition 0015. 04.16.2022. Week of 04.11 - 04.17.2022.
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.
Key Takeaways
Cyclical sectors remain mixed with XLY in a downtrend, but XLF, XLB, and XLRE rangebound.
Defensive sectors are strong with XLP and XLU in uptrends, but XLV rangebound.
Sensitive sectors are mixed with XLC in a downtrend, XLE in an uptrend, and XLI and XLK rangebound.
We have more market cap in downtrends than uptrends.
SPY itself continues to weaken as the largest sectors stall and turn down.
We have a lot of market cap in rangebound conditions, so those resolutions will determine the next move for SPY, specifically XLV, XLI, and XLF.
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 4 of the 11 sectors closed with a gain, while 7 outperformed SPY. The top performer was materials, followed by energy, industrials, and staples. The two laggards were healthcare and technology. Energy recorded a 52-week closing high and staples an all-time closing high. There are more new lows than highs. We saw the average distance from the last 52-week closing high fall again from -6.76% to -7.17% and now to -8.44%.
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.
Year-to-date, the leadership remains the same. XLE continues well ahead of the pack, while XLU and XLP now have positive year-to-date 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 0.60% in value last week. It finished in 5th position and outperformed SPY. Price remains closed below its downward sloping 40-week simple moving average. Momentum is negative. Relative strength remains in its downtrend below its downward sloping smoothed 40-week moving average of relative strength. XLY was dragged down by its largest components including TSLA and AMZN. There were gains in smaller components including the autos and the reopening plays which include travel, lodging, apparel, and restaurants. Price is in a downtrend, though above $154,50 which mark the May 2021 and March 2022 lows.
Financials (XLF). Click to enlarge.
XLF lost 2.64% in value last week. It finished in 9th position and underperformed SPY. XLF remains below its upward sloping 40-week simple moving average. Momentum remains in a downtrend and below its 0-line. Relative strength remains in its falling wedge below its smoothed 40-week simple moving average of relative strength. As it kicked of earnings season last week, XLF was dragged lower banks, both large and small, as well as asset managers, financial data/exchanges, and insurance brokers. Price remains rangebound as momentum and relative strength diminish.
Materials (XLB). Click to enlarge.
XLB gained 0.66% in value last week. It finished in 1st position and outperformed SPY. Price remains above its upward sloping 40-week simple moving average. Momentum is peaking above overhead resistance quietly, as relative strength does the same not so quietly. Bulls are looking for a move above $91. Even though the largest names were flat to down, the participation of copper, gold, steel, agriculture, and chemical names made up for them. Price remains rangebound.
Real estate (XLRE). Click to enlarge.
XLRE lost 1.83% in value last week. It finished in 7th position, again, and outperformed SPY. Price closed lower, but well above its upward sloping 40-week simple moving average. Momentum is now above its average line and accelerating to the upside. Relative strength remains above its almost year-long resistance level. The largest names were down, but we saw strength in retail 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 gained 0.15 in value last week. It finished in 4th position 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. Relative strength remains above very strong and recorded 52-week highs itself. Staples had some strong groups including beverages, tobacco, confectioners, and packaged foods. Price is in an uptrend.
Healthcare (XLV). Click to enlarge.
XLV lost 2.93% in value last week. It finished in 10th position and underperformed SPY. Price has formed a harami like candle at resistance just one week from a new all-time high. The short term message is mixed. We see a breakout from momentum, but relative strength was rejected at prior resistance. We might pause here or see a drop in price in the near-term as buyers get ready to push XLV above $142 in the expectation of trend continuation. The largest groups were down, through biotech and health-care facilities were up. Price is rangebound.
Utilities (XLU). Click to enlarge.
XLU lost 1.13% in value last week. It finished in 6th position and outperformed SPY. Price closed just under its all-time high. Momentum is strong, as is relative strength. 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 2.35% in value last week. It finished in 8th position and underperformed SPY, again. Price remains below its downward sloping 40-week simple moving average. Momentum and relative strength are negative. This sector looks very, very weak. The largest name, GOOG, FB, DIS, and NFLX were all down. We continue to see some strength in telecom services names. XLC remains in a downtrend.
Energy (XLE). Click to enlarge.
XLE gained 0.40% in value last week. It finished 2nd position and outperformed SPY, again. Price remains well above its upward sloping 40-week simple moving average, and well above its 61.8% retracement level from the 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 as does relative strength. XLE was strong in most industry groups. XLE is in an uptrend.
Industrials (XLI). Click to enlarge.
XLI gained 0.34% in value last week. It closed in 3rd position and outperformed SPY. XLI remains below its downward sloping 40-week simple moving average. Momentum is negative. Relative strength has run into previous support and is also testing its downward sloping smoothed average from below. The industry groups were mixed with strength from farm/heavy equipment, aerospace/defense, and airlines. Price remains rangebound.
Technology (XLK). Click to enlarge.
XLK lost 3.79% in value last week. It finished in 11th position and underperformed SPY, again. Price closed below its now downward sloping 40-week simple moving average. Momentum is negative. Relative strength is negative. Last week was ugly for tech names. MSFT down over 7%. NVDA down over 12%. AMD down over 10%. LRCX down over 9%. INTU and ACN down over 6%. AAPL down almost 4%. This included Uncle Warren’s HPQ down almost 6.5%. Price remains rangebound above $142.
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 downtrends increase significantly. At this point we have 33.75% in an uptrend and 55.50% in a down trend.
Last week, from a quantitative perspective, we saw the percentage of SPY’s market cap with a positive momentum condition increased, while the neutral and negative market cap decreased. At this point we have 33.75% with a positive momentum condition, 00.00% in a neutral condition, and 66.50% in a negative condition.
Last week we saw 10.75% of market cap making new all-time or 52-week closing highs.
Last week the percentage of SPY’s market cap with a rising smoothed 40-week moving average of relative strength increased to 60.25% while percentage with a falling moving average decreased to 40.00%.
Last week the percentage of SPY’s market cap in a subjective uptrend fell, while the subjective rangebound and downtrend cap increased. At this point we have 13.75% in a subjective uptrend, 62.25% in a rangebound condition, and 21.25% of market cap in a subjective downtrend.
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 energy and all-time highs staples.
Mid-caps have a positive YTD gain from energy, materials, and utilities. Energy made a new 52-week high.
Small-caps have a positive YTD gain from energy and materials. Small cap staples are coming on strong with a new 13-week closing high.
Large-caps have a YTD gain from energy, utilities, and staples. Healthcare has given back its gains for the time being. As in the equally weighted sectors, we see a 52-week high for energy and an all-time high for staples.
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