Saturday, August 30, 2008

Sector Update for August 30th

After rallying from the mid-July lows and then pulling back, stocks made a bid for new highs, with the S&P 500 emini futures turned back from the 1300 area on Friday. Here is how the eight S&P sectors that I track are faring in their Technical Strength (a quantitative measure of trending) and in the percentage of their shares trading above their 50-day moving averages (in parentheses):

MATERIALS: +240 (45%)
INDUSTRIAL: +140 (53%)
ENERGY: -60 (10%)
HEALTH CARE: -140 (69%)
FINANCIAL: +320 (58%)
TECHNOLOGY: -80 (54%)

If we compare these numbers with those from the last sector update, we can see that Financial issues have strengthened, while some of the sectors that had been stronger early in the bounce--Technology, Health Care, and Consumer Staples--have weakened. Once again, this appears to be a picture of sector rotation, rather than a concerted flow of funds into or out of large cap U.S. equities.