Edition 0008. 03.05.2022.
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.
Sector Performance Table.
Sector performance table sorted by the 1-week rate-of-change.
Taking the gold medal, closing with a fresh 52-week high is energy. Next is utilities, earning the silver medal and making a 4-week closing high. Real estate finished 3rd for the bronze. Lagging sectors included financials, tech, and comm.
5 of our sectors closed positively and 6 closed negatively netting a 0.18% gain. 4 sectors made new 4 or 13-week closing highs, while 5 made new 13 or 52-week closing lows. 6 sectors have a rising 40-period moving average of relative strength which 5 have a falling moving average of relative strength. We see deterioration in quantitative momentum with 5 sectors showing negative momentum, up from 3 2-weeks ago. The quantitative trend condition has also deteriorated with 5 negative trends, up from 3 2-weeks ago.
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.
The YTD chart remains largely the same with XLE leading and XLY, XLC, and XLK lagging. Last week XLF fell from 2nd two weeks ago to now 4th. XLU has risen from 4th to 2nd. XLK has fallen into the 3rd worst position.
Sector Charts
Cyclical sectors: sectors that tend to lead as the economy expands and lag as
the economy contracts.
Consumer Discretionary (XLY)
XLY finished in 8th position and underperformed SPY. Price made a new 13-week closing low as price closed again below its downward sloping moving average. Price is under the October 2021 lows and above the May 2021 lows. Momentum continues to accelerate to the downside. Relative strength is breaking below horizontal support while below its downward sloping 40-week simple moving average of RS. Price is in a downtrend.
Financials (XLF)
XLF finished in last place. It underperformed SPY and registered a new 13-week closing low below its rapidly flattening 40-week simple moving average. Price does continue to hold above its previous swing lows around $37. Momentum resumes its acceleration towards its 0-line. Relative strength turn lower to test its flat 4-week simple moving average from above. Price is range bound.
Materials (XLB)
XLB finished the week in the 7th position and underperformed SPY. The last 6 weeks has given us nothing but doji type candles candles which have all closed below a now downward sloping 40-week simple moving average. Price remains above $78 which mark the September 2021 swing lows. Price has closed at a new 13-week low. Momentum has now turned negative with a cross below its 0-line. Relative strength has been rejected as it tested its upward sloping trend from below. RS remain tentatively above its down sloping 40-week simple moving average of relative strength. Price remains range bound.
Real estate (XLRE)
Real estate finished in 3rd position and outperformed SPY. Price closed below its still upward sloping 40-week simple moving average. Momentum continues to decelerate at its 0-line. Relative strength has a solid week and closed above a confluence of resistance. XKLE is rangebound.
Defensive sectors: sectors that provide goods & services that people require
in both economic expansions and contractions.
Consumer Staples (XLP)
XLP finished in 6th place showing a modest loss just 8 weeks from its last closing high. Price remains above an upward sloping 40-week simple moving average. Momentum has just crossed below its average line, though is still above its rising trendline. Relative strength continues to remain above its upward sloping trendline an now rising 40-week simple moving average of RS. XLP remains in an uptrend.
Healthcare (XLV)
Healthcare finished the week in 5th place and outperformed SPY. Price closed above its upward sloping 40-week simple moving average. Momentum is decelerating just above its 0-line. Relative strength continues a surge to it presses to an almost 6-month high. Price is rangebound but trying to press upward.
Utilities (XLU)
XLU finished the week in 2nd place and outperformed SPY. Which this candle is a beautiful and powerful marabozu, unlike the Dow Utility Average, price has not closed above its pre-covid price levels. Price remains rangebound until it closes above $72. Momentum is positive as the oscillator line tests its average line from below. Relative strength is breaking back above its upward sloping trendline.
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 in 9th position and underperformed SPY. Price is now below its 38.2% Fibonacci retracement level from the 2020 Covid-lows to the September 2021 peak. Price closed at a new 52-week low. new Momentum is strongly negative though slightly decelerating. Relative strength continues to make multi-year lows. XLC is in a downtrend.
Energy (XLE)
XLE finished the week in 1st position, well above its upward sloping 40-week simple moving average, and printed a new 52-week closing high. Price has now broken above the 61.8% Fibonacci retracement level from the 2014 highs to the 2020 Covid lows. Momentum and relative strength are strong. XLE is in an uptrend.
Industrials (XLI)
XLI closed last week in 4th position and outperformed SPY. XLI closed below its downward sloping 40-week simple moving average. Moment is negative though decelerating. Relative strength has been strong since January and is now testing its downward sloping 40-week simple moving average from below. Price remains rangebound.
Technology (XLK)
XLK finished in 10th position last week and underperformed SPY. Price closed below its still upward sloping 40-week simple moving average to print a 13-week closing low. Momentum has now turned negative. Relative strength has broken below its upward sloping 40-week simple moving average of relative strength. Price remains rangebound.
Sector Summary Table
Last week in quantitative trends, we saw market cap in positive trends jump up from 23.75% to 42.75%. For momentum, we saw positive cap gain 0.50%, neutral change from 67% to 37%, and negative momentum change from 29.25% to 58.75%. That was caused by XLB and XLK shifting from neutral to negative. My trend analysis agrees with the amount of market cap in downtrends, though my analysis has more cap in neutral trends than positive.
Source for current weights: https://www.sectorspdr.com/sectorspdr/
Weighted Sectors Across The Cap Scale
& Equally Weighted Large Caps
This table is sorted by Year-to-Date performance
The equally weighted sectors have least collective losses. On average they are down 2.61%. Energy, utilities and staples are up YTD. Collectively they are 12 weeks from their last 52-week closing high.
The large-caps are 3rd worst of the 4 groups. They are down 4.52% YTD. Only energy is positive. They are down almost 11 weeks from their last 52-week closing high.
The small-caps are the 2nd best of the 4. They are down 4.32% YTD. Only energy is positive. The group is 18 weeks from their last 52-week closing high.
The mid-caps are the worst performers of the 4 groups. They are down 4.78% YTD. The energy and materials sectors are positive. Collectively they are 21 weeks of their last 52-week closing high.
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