Monday Sector Strength
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
Let's hope the markets can avoid a major panic today. I'm not sure if the weekend gives investors time to gain perspective and calm themselves, or if it provides time to get worked up and determined to sell before more damage is done. I don't have any special insights today so I chose a couple charts of interest.
Both consumer staples and consumer discretionary have lost ground and are now below the 40-week, but as expected during a time like this the staples were the relatively stronger. The lack of strength in the discretionary stocks since late spring hinted at the current weakness in the overall market.
Biotech stocks held up well last week although they had not participated much as a group in this year's rally, and their bullish percent has hovered in the oversold area for a number of months. The monthly chart (originally from John Murphy) reveals at least one reason the group as stalled since the index has reached a major long-term resistance. This could be a nice area for opportunity if it holds the uptrend line and breaks out above the resistance.
I found this really terrific Elliot Wave labeling by Martin Goldstein in the free daily Financial Sense site. This is really clean labeling in my opinion and each wave shows excellent proportion. It also does not show excessive sub-wave labels, and he didn't prematurely label the end of the current flat correction pattern. Flats are the most difficult patterns to label and often result in throw-overs, traps and false signals. The bullish percent of the precious metals stocks turned up a few weeks back and broke above the 50% level, but with last week's sell off the bullish percent turned lower again signaling caution once more in this area. The shares sold off far worse than the metal which is not a good sign, and the shares were among the largest percent losers on the week which is another bad sign. The Japanese Yen and the US Dollar both rallied on Thursday and Friday as carry-trades were undone around the world which seriously undermines gold and gold stocks. Also, energy and commodities stocks were very weak despite the surge in oil prices, and gold shares usually participate with this group. The gold stocks did hold above the 40-week and are still within the upper level the multi-month trading range, but the overall market backdrop is not helping gold stocks at the moment.
