Edition 0015. 04.16.2022. Week of 04.18 - 04.24.2022.
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 and XLF in intermediate term downtrends while XLB remains rangebound.
Defensive sectors are strong with XLP and XLU in uptrends while XLV remains rangebound.
Sensitive sectors are mixed with XLC and XLK in intermediate term downtrends, XLE in an uptrend, and XLI remains rangebound.
We continue to have more market cap in downtrends than uptrends.
In the large-cap weighted space, we have a lot of market cap in rangebound conditions, so these resolutions will determine the next move for SPY, specifically XLV and XLI.
Across the cap-scale, we continue to see more new lows than highs.
Year-to-date, on average, equally weighted large caps are down the least, followed by mid-caps, capitalization weighted large-caps, and then small-caps are the weakest.
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 2 of the 11 sectors closed with a gain, while 7 outperformed SPY. The top performer was real estate followed by staples. The laggards were energy and communication services. Staples closed at an all-time high while communication services closed at a 52-week low. XLK and XLF printed 13-week lows. There continues to be more new lows than new highs. We saw the average distance from the last 52-week closing high fall again from -6.76% to -7.17% to -8.44%, and now -10.99% below the last 52-week closing high. That said, we are just 2 weeks from 52-week highs in XLU, XLV, and XLE.
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, though it has lost value for the last two weeks, and XLU and XLP now have positive year-to-date gains. Communication services, technology, and discretionary lead the loses as the only sectors to underperform SPY this year-to-date.
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 1.45% in value last week. It finished in 2nd position and outperformed SPY. Price remains below its downward sloping 40-week simple moving average. Price printed a 4-week closing low. Momentum is negative. Relative strength has stabilized and is rangebound, for the time being, below its flat-to-down smoothed 40-week moving average of relative strength. The next logical levels to watch are $187 above and $165 below. XLY was dragged lower by its largest component, AMZN, after earnings. That loss was tempered by its second largest component closing higher on earnings, TSLA. Price is in an intermediate term downtrend, though above $165.50 which marks 38.2% Fibonacci retracement from the March 2020 Covid-low to the November 2021 peak.
Financials (XLF). Click to enlarge.
XLF lost 1.95% in value last week. It finished in 5th position and outperformed SPY. Price remains below its upward sloping 40-week simple moving average. Price printed a 13-week closing low. Momentum is negative. Relative strength remains in its falling wedge below its smoothed 40-week simple moving average. Last week the sector was dragged lower by the large banks and credit services names. All of the insurance names were lower, and notably Schwab lost over 15%. There were a few regional banks that gained on the week including M&T and SVB Financial. The intermediate term trend is down, but still above the key $35 and $32.50 levels.
Materials (XLB). Click to enlarge.
XLB lost 3.73% in value last week. It finished in 9th position, following its 1st position finish two weeks ago, and underperformed SPY. Price remains just above its upward sloping 40-week simple moving average. Price printed a 4-week closing low. Momentum continues to flatten just above 0. Relative strength is threatening to break below its breakout level, though it remains in an uptrend for now. There were large losses in the gold, copper, and agricultural input names. All of the chemical names were down except for PPG and DOW. The intermediate trend remains rangebound.
Real estate (XLRE). Click to enlarge.
XLRE gained 1.25% 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 positive and heading up to test its downtrend sloping trendline. Relative strength remains strong and almost vertical, though it is nearing previous support from below. Last week the specialty, industrial, and residential REITs has a great week. The healthcare, office, and retail REITs were down. This upcoming week we have earnings in notable names such as AMT, EQR, and KIM. The intermediate trend 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. Price printed an all-time closing high. Momentum has turned up. Relative strength remains above very strong and printed 52-week high itself. The performance of XLP’s component industry groups were mostly positive, though in its slow-moving way. The long term and intermediate trends remain positive.
Healthcare (XLV). Click to enlarge.
XLV lost 3.58% in value last week. It finished in 8th position and underperformed SPY. Price has fallen sharply down to its upward sloping 40-week simple moving average just two weeks from a new all-time high. The short-term message is mixed. We see a momentum is strong, but relative strength was rejected at prior resistance. The groups were all down, through ABT stands out as a gainer on the week. The intermediate term trend is rangebound.
Utilities (XLU). Click to enlarge.
XLU lost 2.42% in value last week. It finished in 6th position, again, and outperformed SPY. Price is now two-weeks removed from its last all-time closing high. Momentum is strong, as is relative strength which is holding above prior resistance. While all of XLU’s groups finished lower, on average, 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 7.76% in value last week. It finished in 11th position and underperformed SPY. Price remains extended below its downward sloping 40-week simple moving average. Price closed at a 52-week low and is threatening the $63.50 level which has been an important level for 1.75 years. The next logical level to watch to the downside is the $55-$57 zone which marks the 61.8% Fibonacci retracement level form the 2020 Covid-low to the September 2021 peak. Momentum and relative strength are deeply negative. All of the largest names including GOOG, FB, DIS, NFLX, CMCSA, VZ, and TMUS were down. XLC’s intermediate trend remains trending lower.
Energy (XLE). Click to enlarge.
XLE lost 4.57% in value last week. It finished 10th position and underperformed SPY. Price remains well above its upward sloping 40-week simple moving average and its 61.8% retracement level from the 2014 highs down to the 2020 Covid-low. Price closed at a 4-week closing low. While some time below $80 might be good for the XLE, bulls are looking for a close above $80 and aiming for $101.50, its 2014 all-time closing high. Momentum remains in an uptrend as does relative strength. XLE was weak in all of its industry groups. XLE is in an uptrend.
Industrials (XLI). Click to enlarge.
XLI lost 1.51% in value last week. It closed in 4th position and outperformed SPY. XLI remains below its flat-to-downward sloping 40-week simple moving average. Momentum is negative. Relative strength is flirting with its downward sloping smoothed moving average. The industry groups were mixed with strength airlines on the heels of earnings. Price remains rangebound.
Technology (XLK). Click to enlarge.
XLK lost 2.43% in value last week. It finished in 7th position and outperformed SPY. Price remains below its downward sloping 40-week simple moving average. Price closed at a 13-week low. If $143 does not hold, the next logical level is the $128-$131 zone. This zone marks the difference between the 38.2% and 50% Fibonacci retracement levels from the 2020 Covid-low to the December 2021 high. Momentum is negative. Relative strength is negative and its smoothed 40-week simple moving average is still sloping upwards, just barely. Last week was a tough one for tech. The largest names, including AAPL and MSFT were down. Semiconductors and software names were down big! The standouts from tech were IBM gaining over 9% and the software name WDC which gained almost 6.75% on the week. Next week have3 earnings from AAPL and MSFT. The intermediate term trend is down.
Sector Summary Table
Click to enlarge.
Source for current weights: https://www.sectorspdr.com/sectorspdr/
Last week there were no material changes to the amount of SPY’s market cap in quantitative trends or momentum conditions. The market cap in new highs has reduced from 10.75% to 6.75% as staples made an all-time high and energy did not make a 52-week high as it did last week. Cap % in new lows increased from 0% to 8.75% as XLC printed a 52-week closing low. I changed the subjective intermediate trend in XLF From neutral to down even though the primary trend remains 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.
Across the cap-scale, we continue to see more new lows than highs.
In the mid-cap space, we saw small gains from real estate and utilities last week. The YTD picture remains the same. Energy is leading followed materials and utilities.
In the equally weighted large cap space, we saw small gains from real estate and staples. The YTD picture remains the same. Energy is leading followed by utilities, staples, and materials. Staples printed an all-time weekly closing high.
In the large cap space, as discussed above, we saw gains from real estate and staples. The YTD picture remains the same. Energy is leading followed by utilities and staples. Staples printed an all-time closing high.
In the small cap space, none of the 11 sectors were positive last week. YTD, only energy is positive.
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