Last week's sector update observed that the sectors were in distinct uptrends, with particular strength in commodity-related sectors. The Technical Strength--a proprietary measure of short-term trending--continued into this past week, with notable strength among energy stocks. All sectors registered uptrends, with the exception of financial shares which are in neutral status. We also saw late week weakness among technology stocks, in part due to a pullback among semiconductor issues.
Here is how the sectors shaped up on the Technical Strength measure as of Friday's close:
MATERIALS: 300
INDUSTRIAL: 300
CONSUMER DISCRETIONARY: 280
CONSUMER STAPLES: 360
ENERGY: 460
HEALTH CARE: 280
FINANCIAL: 60
TECHNOLOGY: 120
INDUSTRIAL: 300
CONSUMER DISCRETIONARY: 280
CONSUMER STAPLES: 360
ENERGY: 460
HEALTH CARE: 280
FINANCIAL: 60
TECHNOLOGY: 120
We can see that financial stocks pulled back meaningfully since the prior week. The past week also saw new highs in most advance/decline lines for indexes and sectors, but also a bump up in 20-day new lows. I continue to view the current action as part of a topping process following September's momentum highs. If so, that suggests that this coming week could bring consolidation of the recent gains.
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