Edition 0006. 02.19.2022.
This is the weekly commentary that reviews all 11 sectors that form the S&P 500 ETF, SPY. We are looking at performance, trend, relative strength, and momentum.
We start with performance tables that allow us to track how the symbols have performed over several rolling periods of time. We can see New high/low details, as well as determine trend and momentum using quantitative measures. Here are a few notes to help you interpret the tables.
They are grouped first by family, and then sorted by performance.
Quantitatively, the general trend is determined by price in relation to its 40-week simple moving average. 1 means the trend is up. 2 means the trend is vulnerable. 3 means the trend is down.
1 = close is above the ma and the ma is up.
2 = close is below the ma and the ma is up, close is above a flat or ma that is down.
3 = close is below the ma and the ma is down.
Quantitatively, the general momentum condition is determined by a 12,26,09 Price Percentage Oscillator – think MACD. 1 means the momentum condition is positive. 2 means the momentum condition is positive but decelerating. 3 means the momentum condition is negative but accelerating. 4 means the momentum condition is negative.
1 = the oscillator is above 0 and the histogram is above 0.
2 = the oscillator is above 0 but the histogram is below 0
3 = the oscillator is below 0 but the histogram is above 0.
4 = the oscillator is below 0 and the histogram is below 0.
The ranking of closing highs and lows is as follows:
1 = 4-week closing high or low.
2 = 13-week closing high or low.
3 = 52-week closing high or low.
4 = all-time closing high or low.
The 40-week SMA of relative strength to SPY is as follows:
1 = 40-week SMA is up.
2 = 40-week SMA is same.
3 = 40-week SMA is down.
Please know, if I refer to weightings in symbols, these weights are constantly changing. They were current as of 02/19/2022, though they almost certainly have changed since then. See the links for the most up-to-date weights.
Sector Performance Table.
Sector performance table sorted by the 1-week rate-of-change.
Last week we had XLP close 1.04% higher to make a 4-week closing high. Every other sector closed down. 6 of 11 sectors made a new 13-week closing low, and XLC made a 52-week closing low. The quantitative trend remains the same as 2 weeks ago with XLE, XLF, and XLB above rising 40-week simple moving averages. Momentum has backed off with XLF and XLB decelerating last week.
Sector performance sorted by the year-to-date rate-of-change.
Relative performance chart. This shows the year-to-date performance of the sectors and SPY.
We can see that energy and financials backed off a bit, while staples is making a run at that 0 line.
Sector Charts
Cyclical sectors: sectors that tend to lead as the economy expands and lag as
the economy contracts.
Consumer Discretionary (XLY)
XLY finished the week in 3rd place, losing 0.27% in value and outperforming SPY. Price was rejected from its 40-week simple moving average but is holding above $178 which mark the swing lows from September and October 2021. Momentum has turned negative has crossed below its 0-line. Relative strength is headed up to its 40-week simple moving average. Price is going sideways for now.
Financials (XLF)
XLF finished the week in 9th place, giving back 2.22% in value after 3 weeks of finishing in the top 3. XLF underperformed SPY. Price closed above its upward sloping 40-week simple moving average. Momentum is still above its downward sloping trendline but did accelerate to the downside. Relative strength still holding its breakout of the 9-month falling wedge above a rising 40-week simple moving average of relative strength. Price is going sideways.
Materials (XLB)
XLB finished the week in the 2nd position, again, losing 0.17% last week. XLB outperformed SPY, but price has now been rejected from its 40-week simple moving average 4 weeks in a row. The 40-week SMA is now sloping down. Momentum is looking to test its 0-line. The candles are all small bodied dojis showing indecision between sellers and buyers. Relative strength has broken above its downward sloping 40-week simple moving average. Price is going sideways. The outperformance over SPY was supported by copper, steel, and gold names.
Real estate (XLRE)
XLRE finished in 7th, underperforming SPY, and giving back 1.63% in value. Price is moving down from its still upward sloping 40-week simple moving average. Investors selling and breaking below $44 will show their expectations and increased rates on debt will reduce the asset value and cash flow of their holding while increasing the debt payments. Momentum is accelerating towards its 0-line from above, while relative strength is pushes below its upward sloping 40-week simple moving average of relatives strength. Price is rangebound for now, but going sideways but now 14% below its last 52-week closing high made the last week of December 2021.
Defensive sectors: sectors that provide goods & services that people require
in both economic expansions and contractions.
Consumer Staples (XLP)
XLP finished the week in 1st position. XLP gained 1.04% and did outperform SPY. XLP Price is moving sideways above its upward sloping 40-week simple moving average. Momentum is above its upward sloping trendline but decelerating and threating to break below its 9-week average line. Relative strength is above its upward sloping trendline and rising 40-week simple moving average.
Healthcare (XLV)
XLV finished in 8th position and gave back 2.1% in value and underperformed SPY. Price has closed below its 40-week simple moving average for the 3rd time in 5 weeks. Price is moving sideways below its upward sloping 40-week simple moving average. Momentum continues to accelerate towards its 0-line. Relative strength has moved below its upward sloping 40-week simple moving average and is still battling to break out of its coil (symmetrical triangle).
Utilities (XLU)
XLU finished in the 5th position last week and lost 1.21% in value while outperforming SPY. Price continues to down from its almost 2-year ascending triangle and now from a smaller, 5 month ascending triangle. That measured move takes us down to roughly $58, which is roughly a 50% retracement from the 2020 Covid low 2021 December high. Before getting to $58, it will have to test $63 which marks the October 2021 lows. Momentum has crossed below its average line, but is still above its upward sloping trendline. Relative strength has broken below its upward sloping trendline and is testing its upward sloping 40-week simple moving average of relative strength from above.
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)
XLC finished the week in 11th position giving back -2.71% of value. Price continues to make its lower-low and is now breaking below its 38.2% Fibonacci retracement level from the March 2020 Covid low to the September 2021 high. Momentum continues to accelerate to the downside and relative strength has made another ALL-TIME low.
Energy (XLE)
XLE took a break last week and finished 11th of 11. Energy gave back 3.35% in value. Price was rejected from the 61.8% Fibonacci retracement level from the June 2014 highs to the March 2020 lows. Year-to-date, price is up over 21%. Momentum is still looking strong after breaking above its 10-month long coil (symmetrical triangle). Relative strength is strong and above an upward sloping 40-week moving average of relative strength.
Industrials (XLI)
XLI finished the week in 4th position, again, giving back 1.03% in value, and outperforming SPY. Price is continuing to test $99.50 for buyers. Price continues to close below its now downward sloping 40-week simple moving average. Momentum has now crossed below its 0-line. Relative strength has made a higher-low underneath its declining 40-week simple moving average.
Technology (XLK)
XLK finished last week in 6th place, underperforming SPY, and giving back 1.58% in value. Price has closed below its upward sloping 40-week simple moving average for the 3rd time in 5 weeks. Price continues to trade in its range from $146.85 to $ 177.15. Momentum is accelerating to the down side as the PPO momentum oscillator line accelerates towards its 0-line. Relative strength is testing its rising 40-week simple moving average of relative strength from above.
Sector Summary Table
Market cap in a quantitative uptrend remained at 21.75%. Momentum has deteriorated and 29.50% of market cap now has a negative momentum condition which is up from 17.25% two weeks ago. Positive momentum has fallen from 10% to 3.50%. We have gone from 9.75% of market cap in a negative momentum condition to 17.25%. There is an decrease in new highs while new lows stays the same. We still have roughly 80% of market cap showing 40-week relative strength to SPY.
Source for current weights: https://www.sectorspdr.com/sectorspdr/
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