Sector Overview

I thought I'd take a look at some of the sectors out there. I'll start out with the ugly, work my way up to the ugly and finish off with the good.

First we have the Financials, via the XLF. Below is a weekly chart. I would initially look to short on rallies up to the declining 50 day moving average. On any breaks above that I would still probably be looking to short at some level of prior resistance, but of course I would have to evaluate the situation before making any trades.

Next we have Consumer Staples. The XLP and the XLF are lead the pack on the downside.

After Financials and Staples we have a few groups that are closer to neutral. This group includes Consumer Discretionary (XLY), Industrials (XLI) and Materials (XLB). These groups do have some positive signs, but are not all that far from breaking to the downside.

OK so we got the bad groups out of the way. Now on to some brighter spots.

First I'll start with Energy. The XLE has made moves similar to the previous three ETF's, but it has held above it's January lows fairly well. Also, note the relative strength versus the S&P.

After that we have technology. The XLK, much like the QQQQ's, have turned a corner over the past couple of months. We have seen improvement in this group and it looks as if it wants to hold it's trendline.

Lastly we have Healthcare. As you can see the XLV has been outperforming the broader market since early 2008. It is one group that actually broke it's "wedge formation" to the upside. It then retreated back into it's range but then quickly regained steam.

The one group I did not include was the Utilities (XLU). I didn't cover it because it has basically flat lined over the past few months. It has made similar moves to the SPY, it just has done if with less volatility. In other words, I think it's kind of boring.

I also want to make the point that there are some good Industries within these Sectors. Within Healthcare, Biotechnology and Health Care providers are doing well. In Tech, Internet and Software names are outperforming. I think it's important to make sure you are in the right Industries, and analyzing the Sectors gives us a broader sense of where the strength is.