Sunday, June 28, 2009

Sector Update for June 28th


Last week's sector review suggested that we were in a broad corrective mode defined by May's lows and June's price highs. We did indeed touch the lows in SPY from the middle and later part of May before bouncing higher toward the end of the week. On Friday, new 20-day highs across the NYSE, NASDAQ, and ASE finally exceeded new lows for the first time during the week, once again highlighting that we are in a trading range rather than an outright bear market. A move below this past week's lows, particularly on an expanded number of stocks registering fresh new lows, would suggest a deeper and more significant retracement of the rally since early March.

Here are how the sectors are lining up as of Friday's close with respect to Technical Strength (a quantification of short-term trending):

MATERIALS: -180
INDUSTRIAL: -120
CONSUMER DISCRETIONARY: -40
CONSUMER STAPLES: -60
ENERGY: -140
HEALTH CARE: +440
FINANCIAL: -80
TECHNOLOGY: +160

Recall that sector Technical Strength varies from +500 (strong uptrend) to -500 (strong downtrend), with scores between -100 and +100 signifying no meaningful trending. Note that, with the exception of the strong defensive health care sector, none of the sectors are displaying robust trending. We can also see from the chart above that the technical picture is not meaningfully different from the week previous, with the exception of that bounce in the health care sector.

Going into a holiday week, I am not expecting a break from the broad trading range. Per usual, I will be tracking the trending of the sectors by following the 40 stocks in my basket and reporting trend status prior to each market open via Twitter (free subscription via RSS). I will also be tracking the new highs and lows, which should help us gauge whether or not we're building enough strength/weakness to break the range.
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3 comments:

Noam said...

Dear Dr.

Where can i find the source of the sector analysis?

I would like to track it

Thanks

Brett Steenbarger, Ph.D. said...

Hi Noam,

The source of the analysis is my own proprietary research; it's not published anywhere else.

Brett

Noam said...

Thanks Brett,

Could you explain how did you calculate it? Thanks

Also, i would appreciate if you can explain how do you analyze the bid ask pressure (interval? , divergence? )

Thanks