Notable Technical Developments from the Technology, Industrial, Financials, Consumer Discretionary, Basic Materials, Energy, Utilities, and Real Estate Sectors.
U.S. Sector Updates
The past week saw no significant technical developments in the Communications Services, Consumer Staples, or Health Care 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, Improving
Weekly Technology Video (5:08)
Technology gained further relative strength in our DALI sector rankings over the past week, adding seven new signals since the end of June. This is the most signal improvement from any asset class and further cements technology in the top spot. Large-cap names are pulling back sharply, with those names that have posted the best returns pulling back the most. This seems to be more of a sign of consolidation at this point rather than a precursor to weakness. Small-cap technology representatives like PSCT are now in overbought territory, so those looking to add exposure would be best served waiting for a pullback or normalization in the trading band.
Industrials – Overweight, Improving
Weekly Industrials Video (3:39)
Industrials flexed their muscles over the last week. PSCI led the way higher on the small-cap front while XLI advanced notably, each posting buy signals on their default charts. Using the new buy list to source ideas, KEX was a small-cap winner that could be added to on normalization within the area. BA moved higher to test its trend line but remains a name to avoid, while JBHT slipped on earnings and continues to be a name to trim when possible.
Financials – Overweight
Weekly Financials Video (3:13)
Financials had a big week after regional banks swiftly moved higher along with the rest of the small cap space. The SPDR S&P Regional Banking ETF KRE gained 14.85% over the last week and now has a near-perfect fund score of 5.67. On KRE’s 1-point chart, the fund has rallied to the old major support level of $57 which may act as staunch resistance. Accounting for the recent strength in small cap financials, long-term strength resides in the largest names for now.
Consumer Discretionary – Equal Weight
Weekly Discretionary Video (4:54)
Discretionary stocks were positive over this past one week roll with the Consumer Discretionary SPDR XLY adding roughly 2.5%. The ETF rallied to a multi-year high at $194 and now resides in overbought territory. Among the notable NDW sector bullish percents to move back into Xs this week were Autos and Parts ^BPAUTO, Textiles ^BPTEXT, Leisure ^BPLEIS, Retail ^BPRETA, and Building ^BPBUIL – with Building having the largest increase from 36% to 62%. Delta DAL missed on earnings last week but is rebounding from near-term lows this week. On the earnings front, D.R. Horton DHI will report on Thursday (along with Dominos DPZ). Earnings next week are highlighted by GM, Chipotle CMG, EBAY, Ford F, and O’Reilly ORLY.
Materials – Equal Weight
It was a strong week for materials stocks as the Materials Select Sector SPDR Fund (XLB) gained almost 5.5%, outperforming the S&P 500 by more than 3.5%. The gains for the sector were broad based as the VanEck Gold Miners ETF (GDX) was up nearly 9%, while the SPDR S&P Metals & Mining ETF (XME) gained nearly 7.5%. Meanwhile, the Dorsey Wright Chemicals Index (DWACHEM) was up more than 9%. There were no major changes on the charts of any of the aforementioned ETFs, but the bullish percent for basic materials (^BPECBASMAT) reversed into Xs, indicating increasing breadth in the sector.
Energy – Equal Weight
The Energy Select Sector SPDR Fund (XLE) was up 4% over the last week, outperforming the S&P 500 by more than 230 bps, and returned to a buy signal Wednesday when it broke a double top at $93. The rally in energy stocks came even as crude oil was down 80 bps. The bullish percents for oil (^BPOIL) and oil services and (^BPOILS) both reversed up into Xs, indicating increasing participation.
Utilities – Underweight
Utilities climbed to eighth this week within DALI, overtaking Consumer Staples. The Utilities SPDR Fund XLU rallied 1.8% and reversed back into Xs on its trend chart. Both the bullish percent ^BPECUTILITY and positive trend ^PTECUTILITY reversed back into Xs following Tuesday’s action this week, indicating a boost in participation. Constellation CEG broke down on the news that OpenAI CEO was involved with a nuclear energy startup. Meanwhile, NextEra NEE, GE Vernova GEV, DTE Energy DTE, and Edison EIX highlight notable earnings next week for the broader sector.
Real Estate – Underweight
Weekly Real Estate Video (2:11)
Alongside other rate-sensitive sectors, real estate had a strong week; SPDR ETF XLRE gained nearly 6% over the past seven days. Individual stock participation was also noteworthy, with 42% of names trading in a positive trend and 78% now above their 50-day moving average (each the highest reading seen this year). Watch SLG, a 5 for 5'er that currently ranks first out of 115 names in the real estate stock sector matrix with earnings due today (7/17).
