Power Sector Review

March 27, 2022

This week the major indexes were all up decently on the week giving follow through to the reversal candles we saw last week.  We discussed this more in the Weekly Macro Review. The Equal weight power universe looked more like small caps in the weekly performance, on the equal weight sectors we break it into we see there was a big dispersion of returns.  Only a few sectors were negative. Consumer Discretionary rolled over after a weak bounce. Healthcare consolidated most of the week just below the base breakout level, but ended on the lower end of that. Industrials also consolidated most of the week, but its digestion was above the base break level. Both can move good, but the Industrial chart looks stronger at the moment. It could be hard for the overall markets to make too much progress without Consumer Discretionary firming up.

In the quickview sheets below we start with the Short-term breadth view which is more valuable at extremes. Not really where we are in most spaces. There are a few highlighted outliers. As mentioned above Consumer Discretionary weakness is notable, and Household durables is the anchor as a lot of panic over higher rates lasting longer than first thought.  This type of panic can come near short term extremes, so if rates start easing off this area could see a fast move higher. Construction Materials is a related subsector that is struggling as well compared to the Universe.  On the Moving Average breadth qv shows Consumer Discretionary has deeper issues than just Household Durables. Household Products also struggling.   Software has a pretty extreme look with 78% %>20sma and only 23% %>200sma. Then you have Internet and Direct Marketing with 71% %>20sma and only 5% %>200sma which is a huge differential worth watching.  Your major strength is in many of the commodity and Utilities subsectors which are in the slideshow at the bottom

Digging into the subsectors with various angles to see what is performing.  As far as the top rankings, we had more small moves, but nothing really new.  In the next view sorted by the RS Movers column to look at gainers. this is highlighting different group of names that may not be the top performers for this week but have moved the most RS points over that time. You can take deeper look by going to the Universe Page and heading to the table at the bottom; or you can go to the top menu and search under the sector tab for specific subsector pages.

Subsectors that outperformed SPY on the week

One more view that is checking out are all the subsectors that outperformed the SPY for the week. Below that we have each RSI chart in the order of the weekly performance.  Some of the sectors were more than 4 times the return than the $SPY on the week. Of course those consisted of Energy subsectors (all of them) and Industrial Metals, but there were 15 in all of the 51 that outperformed the markets on the week.  Below we have the RS/RSI charts for each you can watch in the slide show or click anywhere on the slide to expand for a closer view.

I will leave it there for this breakdown. It gives a good bit to chew on and we want to spend some time working on ETF and some stock setups to start the week with. Not necessarily setups that will go right out of the gate on Monday’s open, but ones we believe can work base on which scenarios on the broad markets play out over the coming days.

This covers an overview of what we are seeing going into the week. We will add more color and setups throughout the week, so stay tuned!

This information is for educational purposes only and is not a recommendation to do anything, at all….  Please see the full disclosure in the footer

As always, I hope this helps!