Not a lot has changed fundamentally since the last sector analysis. The cyclical flight to safety continues. It has been hard to discern on the daily charts with the noise created by the interest rate hike via December sector changes.
A few key points outside the sectors to remember. The Russell has continued to underperform this year. That alone is a huge sign of a flight to safety, as the Russell is largely small cap growth, whereas the other major indices have more dividend paying recession proof large caps. Gold has been turning its bottom into a cup, with a lift the past week in the gold miners following last week’s lift in gold.
The first big cyclical shift to safety is typical from risky stocks to less risky recession proof stocks. Despite the rally this week, we did see a relative weakening of the tech giants. Apple was down significantly two weeks in a row, and barely up this past week. Google didn’t do much better. Netflix was down all three weeks. Ditto for Priceline.
All sectors were up this week, with Consumer Discretionary and Telecom, two “safety” sectors, performing exceptionally well, maintaining their uptrends. Healthcare, still battered from its highs of the year, has been on a continued uptrend too. The others that did well appear, more or less, to of recovered some of their recent losses, rather than showing continued uptrends.
Sectors that looked good this week, but are still showing a trend of lower highs on the weekly charts, include Energy, Materials, Industrials, Consumer Discretionary (still hasn’t broken long-term uptrend, yet, though), Financials, and, just beginning to break its uptrend, Information Technology. Having 6 of the 10 S&P 500 sectors looking bearish on the weekly is consistent with the continued beginning of a bearish market, particularly since they are not the safety sectors.
A quick zoom into the chart, where each bar is still a week, shows the recent trends better. View the previous chart to see which sector each chart is.