Sector Update for January 17th

Last week's sector review found that the S&P 500 sectors were largely in a neutral mode, with the exception of financial stocks, which were in clear downtrend. Those financials, especially banks, led stocks further downward this past week, placing most of the sectors in clear downtrends, as measured by Technical Strength, my quantification of short-term trending behavior. Here's how we look as of Friday's close:

MATERIALS: -300
INDUSTRIAL: -280
CONSUMER DISCRETIONARY: -120
CONSUMER STAPLES: -20
ENERGY: -200
HEALTH CARE: -80
FINANCIAL: -500
TECHNOLOGY: -120

We can see that the two most defensive sectors, consumer staples and health care, are showing relative strength. Financial shares are extremely weak, and materials stocks are laboring under the burden of commodity weakness. Clearly the market is behaving as if the financial crisis affecting banks--and recessionary outlook overall--have not yet resolved.

Technical strength ratings for the basket of 40 stocks taken from the eight sectors above are published each morning before the market open via Twitter (free subscription). Comparing the ratings day-over-day provides a nice measure (along with Demand/Supply and 20-day highs/lows) of whether the stock market is gaining or losing short-term strength.
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