Within the Domestic Equities Sector Breakdown there have been a variety of changes which are worth consolidating and mentioning in a single report piece.

From a broad ranking perspective, the last few weeks haven’t offered too much in the way of changes to take inventory of. Within the DALI rankings, International Equities and Cash remain in positions of strength, followed by Domestic Equities and Commodities. Within the Domestic Equities Sector Breakdown, however, there have been a variety of changes that are worth consolidating and mentioning in a single report piece. Over the last month and a half:

• Financials and Energy are the biggest losers, moving from the 2nd and 4th positions to the 7th and 8th positions respectively.
• Industrials and Consumer Staples have jumped into the 2nd and 3rd position, rounding out the sector overweights.
• Technology has jumped just outside of an overweight rank, sitting in 4th in comparison to its 7th rank at the beginning of the time frame.
• Healthcare and Consumer Discretionary jumped above Energy and Financials, but it should be noted the change is mostly due to other sector’s weakness rather than their own strength.
• Communication Services moves above Real Estate into the 10th position, exiting the bottom-ranked sector for the first time in over a year.

These changes can leave the average individual feeling like their head is spinning, watching a tennis match of relative strength between the groups. At times like this more than ever, the prudent investor should remember to use the DALI rankings as a piece in the puzzle in establishing what action is real, and what action is just part of the storm. Today’s report will aim to do just that.

The “Headliners”:

Financials and Energy Deteriorating: While the former comes at the expense of a fundamentally unique circumstance, the action has led the technical picture to deteriorate to unacceptable levels. The Financials-Banks group is the worst-ranked group on the ACGS page, being the only group to score below an average score of 1.0. While oversold, exposure should look to be trimmed on rallies. 2022’s darling Energy has quickly fallen from grace, seeing the Group fall below a 3.0 average score and below the money market. The broad proxy for the group XLE reversed down into O’s against the money market on its 6.5% Relative Strength chart, suggesting growing weakness from the group. Continue to exercise caution.

Technology Advancing: As previous reports have touched on, Technology has adopted a more defensive posture like Consumer Staples, which has already established itself in an overweight position. The tech-heavy Nasdaq 100 (NDX) remains in a positive trend and rallied above resistance intraday Wednesday. Heavyweight Apple AAPL has picked up additional technical attribute points over the last month, giving a sign of growing strength from the Tech Generals. Representative XLK is the highest-ranking fund of the SPDR Sector Suite, clocking in at a strong 4.63 fund score.

The “Too Early to Call”:

Healthcare and Consumer Discretionary Advancing: Advances for the two groups come largely at the expense of the previously mentioned “Headline” deterioration for Financials and Energy. Both groups’ advances seem to simply be a consequence of other circumstances rather than true strength. Both groups earn an equal weight designation at the time of writing.

Communication Services Advancing: Despite moving up from the bottom ranking for the first time in over a year, the group remains in underweight territory. While the move should continue to be monitored going forward for signs of further improvement, the sector remains one to avoid from a broad sector perspective. 

Of course, it should be noted that any one area can show a pick-up (or breakdown) of Relative Strength at any point, and overarching notable areas of strength will undoubtedly continue to shift if the market continues its recent run of volatility. As always, continue to keep a watchful eye on the sector breakdown using various areas of the platform to stay up to date as we wrap up what has been an eventful first quarter of the year.