Power Sector Review

February 7, 2021

Chart Highlights

As we start the week Energy, Financials, and Utilities still lead in RS rankings. However, late last week consumer discretionary and tech made an attempt to outperform. It will be interesting to monitor this rotation and if it has any staying power. 

Financials was the RS mover leader last week as rates shot up. While Energy remains the leader, the question is will it slow down and then what? We will be able to see exactly when that happens with and react as necessary based on how it holds up to any challenge. If energy takes a rest and rates take a break, we may see technology and discretionary get the bid. Amazon was a catalyst late last week for discretionary and will need to follow through on its earnings move, but it certainly was not the only mover in the space.

The short term breadth picture is very mixed, while still leaning toward the weaker side. We see mixed results on the 10 days highs and 10 day lows. The percent of stocks above their 20 day moving average still shows mostly red, but breadth thrusts continue to work off their extremes. Most were oversold, so those that are the highest here saw the strongest participation off the recent lows.. Energy still continues to lead along with financials. It’s interesting to note that Communication services has the most stocks trading above the 20 day moving average, and they attempted to make significant 10 day highs as well. An area to keep an eye on if the bounce gains steam as it has been a chronic underperformer for a while now.

Equal weighted Subsector ranked by weekly performance shows the start of a potential rotation into discretionary, health care, and technology. By ranking by weekly performance and looking at the RS rankings, we can see that the recent relative losers made the most gains last week. There’s a lot of red at the top of the RS rankings. It’s interesting to see Hotel, Restaurant, and Leisure outperforming all others. The re-opening theme will be something to monitor as last week’s price movements show it should be.

The video will take you through our move down into the sectors that are moving and look at many of the setups based on our 4 pillars of relative strength. Also a quick introduction to the Custom RS scans that allow you to put in stocks, ETFs and mutual funds and rank them versus each other using our relative strength scoring.

As always, I hope this helps!