Here is the state of various sectors vs. the broad S&P 500 (SPY) as the pro-yields items finally caught a bid yesterday. I’ve added new daily and weekly charts with more sectors and sub-sectors. As always, the daily charts show the simple 50 day average and the weekly charts show the exponential moving average that seems most relevant the longer-term situation.
First, here are the new charts. On the daily chart Real Estate (IYR is stuffed with REITs) and Utes got hit on a day when long-term yields inched up just a teeny. There was a lot of pressure built up there. Tranny is sideways and unimpressive, Biotech is sideways and getting quite impressive (although I have sold most of my Bio/Pharma related items on this rally), Medical Device continues to lead but consolidates and Retail is consolidating a nice move.
IYR/SPY weekly is really still down trending, although making an attempt to take leadership. Yields will likely decide. It’s pretty similar for Utes. A ‘W’ bottom in the ratio? We’ll see. Transports… blah. Biotech is after all, just testing its relative downtrend. Medical Device… overbought, over valued and still fully leading. This is an area I’ve consistently been long of, with the exception of INGN, which I still hold short (with the scars to prove it). Retail is interesting in its ratio’s attempted trend change.
Daily Financials took the other side of the yields trade yesterday and got a pop within its still firm relative downtrend. Energy is hanging around with the Middle East drama boosting oil. Healthcare can be watched for leadership. Lately it has been driven by its Bio/Pharma segments. Industrials and Materials are similar to Financials in that they are more positively correlated to rising long-term yields. Yesterday their still bearish trends got a bounce. Tech leadership, as seemingly always, is intact.
The weekly asks why you’d favor anything but Tech over the broad SPY? Energy and Healthcare are making moves, but are still trending down, relatively. Note that Healthcare could gain relative strength if the economy were to start flat lining or easing.
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