Thursday, May 22, 2008

Technical Strength by Sector and Other Market Themes

* Technical Strength - Earlier posts have noted considerable sector rotation within the market's bounce since March. With the recent market weakness, here's how the technical strength of the S&P 500 sectors are now looking:

MATERIALS: +120
INDUSTRIALS: -380
CONSUMER DISCRETIONARY: -60
CONSUMER STAPLES: -240
ENERGY: +380
HEALTH CARE: -280
FINANCIAL: -400
TECHNOLOGY: -160

The only strength we're seeing is among the commodity-related sectors. The sectors that have weakened most notably are the industrials and technology, which suggest that energy and commodity related strength is showing its effect on anticipated economic growth. Wednesday's new high/low figures underscores how the current market is one of haves and have nots: we had 1019 fresh 20-day highs across the NYSE, NASDAQ, and ASE and 868 20-day lows.

* Why Commodity Markets Are Exploding - Thanks to a very astute reader for passing along this summary of testimony before the Committee on Homeland Security and Governmental Affairs. Eye-opening reading.

* Why Oil Prices Are Exploding - As oil producers become increasing consumers, exports decline over time; another thought-provoking piece passed along by John Mauldin.

* Decisive Break - Trader Mike sees the recent market action as a decisive break through a level and makes particular note of action in the Transports. See also this worthwhile and relevant post on how mini-bubbles develop in the market, as momentum trading makes its comeback.

* Themes for the Current Market - The Kirk Report once again picks out important themes, including myths of energy independence, warnings of a commodities bubble, and where the action is in MSN Money's Stock Scouter.

* Time Zones in the Stock Market - An outline of what goes on at different times of day, something day traders keep track of.
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2 comments:

Thomas said...

Interesting testimony that should receive a lot more mainstream coverage. I wonder if the fed is creating a bubble in futures index speculation by providing so much liquidity to help "heal" the damages they caused by providing so much liquidity that set up the housing bubble.

Jim said...

Naturally, the Chief Economist for the CFTC disagrees. His testimony is here:

http://www.cftc.gov/stellent/groups/public/@newsroom/documents/speechandtestimony/oeajeffharristestimony052008.pdf

Jim