Last week's sector review noted strength among large cap stocks, but weakness within specific sectors and among small caps. This past week failed to see a broadening of the market rally, and we moved lower as the week progressed. That left the eight sectors that I track weekly (above) in a mixed Technical Strength status.
(Recall that Technical Strength is a proprietary short-term measure of trending and varies from a very bullish +500 to a very bearish -500, with scores between -100 and +100 indicating no significant directional tendency).
What we see is that Health Care stocks are the only group in a strong uptrend; Financial shares remain in a downtrend. Other sectors are either non-trending or weakly trending higher. The greatest week-over-week decline in strength occurred among Consumer Discretionary and Energy stocks, as economically-sensitive sectors weakened overall.
Here is how the sectors looked as of Friday's close:
MATERIALS: 220
INDUSTRIAL: 120
CONSUMER DISCRETIONARY: 80
CONSUMER STAPLES: 220
ENERGY: -40
HEALTH CARE: 320
FINANCIAL: -200
TECHNOLOGY: 80
INDUSTRIAL: 120
CONSUMER DISCRETIONARY: 80
CONSUMER STAPLES: 220
ENERGY: -40
HEALTH CARE: 320
FINANCIAL: -200
TECHNOLOGY: 80
We can see from the chart above that Financial stocks have been in a negative strength mode for several weeks running. This bears watching: it is unusual for a sector to not show greater rotation during a period of generally firm index prices. Such persistent weakness suggests that investors may be anticipating further bad news from this key sector.
Overall, however, the sector readings are neither meaningfully overbought or oversold. They're consistent with a consolidating/correcting market that has moved significantly higher since late October, but are not at levels that have been seen at recent intermediate-term bottoms. As always, I will be tracking market trending via my basket of stocks each morning prior to the market open via Twitter (follow here). For a listing of the stocks that go into my sector-based baskets, check out this post.
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