Friday, August 31, 2007

Technical Strength by Sector

My last post introduced some of the work I'm doing to assess the market's technical strength. One of the interesting features of this research is the ability to break the technical strength measure down by sectors within the S&P, based on the scores from five highly weighted stocks within each sector. Here's how the Technical Strength Index (TSI) breaks down as a function of sector, as of 8/30/07:

* Materials - Four stocks neutral, one strong; sector TSI = +40

* Industrials - Three stocks weak, one neutral, one strong; sector TSI = -120

* Consumer Discretionary - Three stocks neutral, one strong, one weak; sector TSI = -40

* Consumer Staples - Three stocks neutral, one strong, one weak; sector TSI = 0

* Energy - Four stocks strong, one neutral, sector TSI = +200

* Healthcare - Three stocks neutral, one strong, one weak; sector TSI = +40

* Financial - Three stocks weak, one neutral, one strong; sector TSI = -160

* Technology - Three stocks strong, two neutral; sector TSI = +200

Note that almost all the market's strength is coming from the Energy and Technology sectors. We're seeing particular weakness among Financials and Industrials.

While we've come nicely off the recent lows, it remains to be seen if that strength can spread across the various sectors.

I will increasingly utilize Twitter to spit out the results from my research at the start and end of trading days. That will enable readers to track shifts in the daily values for themselves.

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