Sector Update for September 20th

Last week's sector review found that none of the eight S&P 500 sectors that I track weekly were trading in downtrends, per the proprietary Technical Strength measure (a quantification of short-term trending that is similar in logic to a goodness of fit measure to a regression line). If you click on the chart above, we can see that this has continued to be the case this past week, as all sectors are trading in varying degrees of uptrend.

(Note: The Technical Strength measure by sector varies from +500, strong uptrend, to -500, strong downtrend. Readings between -100 and +100 suggest no significant directional tendency).

We can again see that the economically sensitive Materials, Industrial, Consumer Discretionary, and Energy stocks are quite strong; the more defensive Consumer Staples and Health Care sectors are relatively weaker. This sector configuration suggests that equity participants are in a risk-seeking mode, betting on a recovering economy.

Here is how the sectors finished this past week:

MATERIALS: 320
INDUSTRIAL: 400
CONSUMER DISCRETIONARY: 360
CONSUMER STAPLES: 180
ENERGY: 320
HEALTH CARE: 140
FINANCIAL: 320
TECHNOLOGY: 220

Note strengthening of Financial shares week over week and some weakening of Technology stocks. In general, however, over the past four weeks we've seen no significant downtrends among the sectors. This reflects the underlying strength of the market rally, which has brought fresh bull peaks to advance/decline lines and the new high/new low indicators. While we're seeing some near-term consolidation of recent gains, this has not led to meaningful distribution among the stocks comprising my basket.

I will be updating the trend status of my basket each day before the market open via Twitter. Those tweets also update the Demand/Supply momentum measure and 20-day new highs/lows. To follow the Twitter stream free of charge, you can access the TraderFeed Twitter page.
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