Saturday, November 08, 2008

Sector Update for November 8th

Last week's sector update found a neutral short-term trending mode among the eight S&P 500 sectors that I follow via a basket of 40 stocks (five highly weighted issues within each sector). After briefly turning bullish, the two-day decline of Wednesday and Thursday returned many of the sectors to their short-term downtrends. Here's how we stand on the Technical Strength measure, with the percentage of stocks in each sector trading above their 20-day moving averages--as assessed by the excellent Decision Point site--in parentheses:

MATERIALS: -380 (23%)
INDUSTRIAL: -200 (16%)
ENERGY: -60 (38%)
HEALTH CARE: -140 (43%)
FINANCIAL: -280 (21%)
TECHNOLOGY: -280 (18%)

We can see that recessionary concerns are weighing on raw materials stocks and technology shares. Financial stocks, after seeing a solid bounce thanks to government support, have since fallen back into a short-term downtrending mode.

The percentage of stocks above their 20-day moving average captures trending on a more intermediate-term time frame. Note that sectors that bounced well during the recent market rise, such as health care and energy, still show fewer than half of their components trading above their moving averages. Particular weakness is evident among consumer discretionary, technology, and industrial sectors--all reflecting recessionary concerns.