Notable Technical Developments are included from the Technology, Industrial, Consumer Cyclical, Basic Materials, Energy and Real Estate sectors.
U.S. Sector Updates
The past week saw no significant technical developments in the Communication Services, Consumer Non-Cyclical, Healthcare or or Real Estate Sectors. Those that saw noteworthy movement are included below, in order of their relative strength ranking in the DALI domestic equity sector rankings. Sector designations are based on DALI sector rankings and are as follows: 1 - 3 overweight, 4 - 7 equal-weight, and 8 - 11 underweight.
Technology- Overweight
Weekly Technology Video (3:42)
Technology continues to sit atop the DALI rankings. The cap-weighted sector representative XLK was the 2nd best performing (out of 11) of the broad sector funds over the past week, even though it lost over 2% (through 4/16). The equal weight and small-cap camps within technology tell a different story, where Tech sits 5th (out of 11) and last (out of 9), respectively. The consolidation from XLK has left clear overhead resistance around $211 with initial support coming in just below $200. AAPL continues to show difficulty but is very close to support at $166 from last October’s lows. If that holds, improvement from one of the largest global stocks could provide tailwinds for the broader sector.
Industrial- Overweight
Weekly Industrials Video (2:33)
Industrials continue to rank strongly this week, sitting in 2nd place. However, there has been some points of possible weakness in one of the sector's strongest subsectors, the transports/non-air group. Earnings from JBHT came in weaker than expected, falling notably with intraday (4/17) action. ODFL is on deck, a technically stronger name you could look towards after earnings if the technical picture remains sound.
Consumer Discretionary- Overweight
Weekly Consumer Discretionary Video (3:22)
Discretionary stocks pulled back along with the broader market over the past one week roll as the Consumer Discretionary Select Sector SPDR Fund XLY fell 4.56% and underperformed the S&P 500 SPX. On the point and figure chart, XLY returned to a sell signal and, following the recent double top formation, initiates a shakeout pattern as the fund has fallen to $172 within intraday action Wednesday. From here, the action point for the shakeout pattern would be a reversal back into Xs at $178 and the pattern would be complete upon the triple top break at $186. Within the subsectors of Discretionary, Autos and Parts DWAAUTO and Leisure DWALEIS were among the biggest downside movers and both subsectors’ bullish percent indicators pulling back into Os as participation has decreased. United Airlines UAL reported positive earnings and reaffirmed guidance which led the stock to move higher and challenge its bearish resistance line. Las Vegas Sands LVS will report earnings following market close on Wednesday, while D.R. Horton DHI will report before market open Thursday. Next week begins the bulk of earnings and kicks off with the large automakers General Motors GM and Tesla TSLA on Tuesday and Ford F on Wednesday.
Basic Materials- Equal Weight
Weekly Basic Materials Video (2:01)
Basic Materials moved up to sixth in the DALI sector rankings, overtaking energy. This move comes despite the Materials Select Sector SPDR Fund (XLB) losing a bit more than 4.5% over the last week. The Vaneck Gold Miner ETF (GDX) was down more than 3% and fell to a sell signal on its default chart when it broke a double bottom at $32.50. Despite the pullback, GDX remains in heavily overbought territory with a weekly OBOS reading north of 75%. The S&P Metals & Mining ETF (XME) was down 2.4% over the last week but reversed up into a column of Xs on its RS chart versus the S&P Equal Weight Index ({SPXEWI]). So, while the materials sector has fallen with the broader market, it has gained relative strength recently.
Energy- Equal Weight
Energy fell to seventh in the DALI rankings, being overtaken by basic materials. Energy’s buy signal tally has remained static, so this change was due to materials gaining relative strength as opposed to energy losing it. The Energy Select Sector SPDR Fund (XLE) was down a little over 3% over the last week, roughly in-line with the market. XLE reversed down on its default chart but remains on a buy signal and with a favorable 4.37 fund score.
Real Estate- Underweight
Weekly Real Estate Video (1:38)
Real Estate had another rough week. The sector lost buy signals in DALI and moved below cash on the Asset Class Group Scores page. Additionally, the sector ten-week chart fell to 14% which means 86% of names now trade below their 50-day moving average. Avoid broad exposure. For focused ideas, check out our latest Friday Feature.
