Monday Sector Strength
All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
I received a comment questioning this rally due to the lack of volume. I tend to agree, but I thought that volume was weak in January 2006 and again in June 2006. Both times the market continued to be strong. The OBV isn't that great either for the NYSE, but OBV is hitting new highs for the MID and SML indexes. Since there are doubts and mixed signals about the rally when looking at volume, maybe the thing to do is switch to the weekly moving averages for a different view of the market. The moving averages are a fairly objective way to evaluate the market, and based on the figure below the market looks healthy. Most of the major indexes have now moved above the 10-week average while never breaking below the 40-week. That's a pretty strong, broadbased up trend.
The NASDAQ continues to lag the market as it has for a number of years now with only a few brief periods of leadership such as last fall. For now, it appears most of the funds are flowing into the NYSE and AMEX, and away from the NASDAQ.
The Dow Industrials are lagging the market again as it has for a number of years, similar to the NASDAQ. The more economically sensitive Transports are holding up okay while the Utilities continue to dominate. Generally a market isn't led by the Utilities, or the AMEX, but this bull market is different as funds have flowed in the stable, high-dividend Utilites and the energy-dominated AMEX. I think the attraction to the Utilities is due to the low long-term bond rates that make their dividends more attractive, and the large energy component of the utilities particularly related to natural gas. But also Utilities are probably very popular with the baby-boomers about to retire who want their retirement funds in equities but don't want the risk of most stocks.
The MID caps continue to be the outperformer and the SPX the laggard, although the SPX relative strength has now pulled back to a support level. A break below this level would confirm the trend, but holding above might indicate an opportunity developing.
Kevin's Market Blog made the observation that steel stocks didn't really correct along with the market selloff starting Feb-27, showing the incredible, continuing strength of the index. This seems very bullish for steel stocks and the world economy, although there is a divergence developing in the RSI compared to prices. Note the outstanding long-term relative strength in the bottom indicator.
