Info!! Sector Update For March 1St

Last week's sector review concluded, "It is non only the weakness, but the designing of sector weakness--with relative describe inwards defensive sectors together with relative weakness amidst economically-sensitive ones--that suggests that nosotros cause got all the same to plough the corner on the bear." That weakness continued through this past times week, as the viii S&P 500 sectors that I runway regularly displayed sustained weakness inwards the Technical Strength mensurate (a quantification of trending behavior).

Here is how the sectors measured upward past times Friday's close:

MATERIALS: -380 (14%)
INDUSTRIAL: -420 (2%)
CONSUMER DISCRETIONARY: -340 (15%)
CONSUMER STAPLES: -260 (13%)
ENERGY: -400 (10%)
HEALTH CARE: -500 (6%)
FINANCIAL: -360 (6%)
TECHNOLOGY: -220 (20%)

Recall that Technical Strength for the sectors varies from -500 (very rigid short-term downtrend) to +500 (very rigid short-term uptrend), alongside readings betwixt -100 together with +100 signifying no meaningful trending. We tin come across that all of the sectors are inwards downtrends. The really weak reading amidst wellness attention issues is specially notable, as this has been a defensive sector that has outperformed the marketplace inwards recent weeks. The concerns over reimbursement plans inwards the proposed budget cause got taken a toll on that sector, leaving traders together with investors alongside few places to hide.

When nosotros expect at a longer fourth dimension frame, focusing on the percent of stocks inwards each sector that are trading higher upward their 20-day moving averages, as reported past times Decision Point, nosotros come across equal weakness. None of the sectors shows 50% or to a greater extent than of its components higher upward that cost benchmark; none are fifty-fifty close.

What makes this marketplace notable is that oversold levels are remaining oversold from calendar week to week, rather than leading to important rallies. The 785-790 expanse inwards the S&P 500 Index (ES) futures represents intermediate-term resistance; as long as nosotros cannot sustain rallies higher upward that level, the marketplace volition demand to probe lower cost levels to detect important buying involvement together with perceived value.

As always, I volition endure updating the tendency condition of stocks inwards my handbasket (equally weighted amidst the viii sectors) each morning time earlier the marketplace opened upward via Twitter (free subscription via RSS). I cause got constitute that this is an effective agency of tracking day-to-day shifts inwards the market's tendency status.
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Info!! Indicator Update For March 1St

Last week's indicator review constitute that nosotros had a bounce inwards marketplace forcefulness in addition to were at i time gauging whether that bounce could Pb to fresh bull marketplace highs. This by calendar week has kept this interrogation inwards doubt, every bit almost of the indicators weakened over that catamenia amid signs that nosotros mightiness last making lower highs inwards the major stock marketplace averages.

Recall that Technical Strength (top chart) is a mensurate of short-term trending. Sector Technical Strength is at i time mixed, alongside ii sectors showing bullish readings (Industrial, Consumer Discretionary); 3 giving neutral signals (Consumer Staples, Financial, Technology); in addition to 3 giving bearish readings (Materials, Energy, Health Care). The commodity-related Materials in addition to Energy stocks were specially weak from the prior week's readings; no sector showed appreciable forcefulness from the prior week.

New 20-day highs drib dead along to outnumber novel lows (second nautical chart from top), but rest off the prior week's peak. We too saw a spike inwards novel 20-day lows on Thursday, reaching 458. An expansion of 20-day lows inwards a marketplace that has been rising is i of the to a greater extent than reliable indicators of a marketplace cause to plough around. I volition last watching this indicator closely to run across if nosotros expand novel highs in addition to drib dead along the uptrend from the early on Feb lows or whether nosotros present a blueprint of toppiness amid shares.

The Cumulative Demand/Supply Index, a running total of Demand minus Supply (second nautical chart from bottom; run across this post for to a greater extent than detail), too showed but about deterioration this by week, but remains higher upward zero. It is mutual for this indicator to overstep out ahead of price, in addition to so that fresh cost highs on lower Cumulative DSI readings would non last uncommon inwards the least. Indeed, that is the usual blueprint for marketplace upswings. Failure to attain higher prices in addition to sustain positive Cumulative DSI readings would propose potential problems alongside the bullish trend.

Finally, nosotros tin run across the advance-decline draw of piece of occupation specific to S&P 600 pocket-sized cap issues thank you lot to the first-class nautical chart from Decision Point. We are at an of import overstep degree inwards that A/D line; I am watching closely to run across if pocket-sized caps tin drib dead along to Pb the agency higher, or whether they volition coil over in addition to deed dorsum into the advance/decline draw of piece of occupation range. New A/D highs amid pocket-sized caps would last a corporation indication of a continued bull tendency for stocks.

Overall, I'm inwards Missouri mode, content to permit the marketplace present me what it's going to do. I am mindful of the deteriorating indicators in addition to the difficulty stocks are having inwards achieving novel bull marketplace highs, but I'm too impressed alongside how the marketplace has held upward so far inwards the confront of negative economical news. Until shown otherwise, I hold the opinion that nosotros are inwards a cyclical bull marketplace inwards a secular comport marketplace in addition to that nosotros are inwards a topping/distribution stage of the bull deed from concluding March.
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