Notable Technical Developments from the Financials, Industrial, Technology, Consumer Discretionary, and Real Estate Sectors.
U.S. Sector Updates
The past week saw no significant technical developments in the Communication Services, Basic Materials, Utilities, Consumer Staples, Healthcare, or Energy Sectors. Those that saw noteworthy movement are included below, in order of their relative strength ranking in the DALI domestic equity sector rankings, as of 8/27/2024. Sector designations are based on DALI sector rankings and are as follows: 1 - 3 overweight, 4 - 7 equal weight, and 8 - 11 underweight.
Financials – Overweight
Weekly Financials Video (2:17)
Financials continue to show signs of strength. A bellwether in the sector, JP Morgan Chase & Co. (JPM), notched a new all-time high this week and trades on six consecutive buy signals. JPM is closing in on heavily overbought territory, but the long-term strength is apparent. The sector ranks high on both the DALI and Asset Class Group Scores and is one of the most improved sectors this year.
Industrials – Overweight
Weekly Industrial Video (3:04)
The industrials sector is a featured overweight this week as the top three sectors in DALI remain largely insulated in terms of overall buy signal count. Participation has improved, seeing both cap and equal weighted reprsentatives XLI and RSPN advance higher off recent lows. Both remain options within a balanced portfolio. Packaging Corp of America PKG is a strong option to add to as its trend line seems strong, and Curtiss Wright CW could be added to on normalization on pullbacks towards $300.
Technology – Overweight
Weekly Technology Video (3:59)
The Technology sector is still ranked third in the DALI sector breakdown after falling from the top spot earlier this month. The broad representative XLK has rebounded from an oversold condition to sit in the middle of its trading band. All eyes will be on NVDA as they report earnings after the market close Wednesday. NVDA has shown recent improvement after falling from all-time highs seen in June, maintaining a 4 for 5 TA rating positioned just above the middle of its respective trading band. CRM and CRWD are also on deck to report Wednesday afternoon, each seeking to improve their 2 for 5 TA rating.
Consumer Discretionary – Equal Weight
Weekly Consumer Discretionary Video (6:13)
Though positive, Discretionary stocks lagged the broader market over this past week. Participation increased as the bullish percent for the broader sector ^BPECCONCYC reversed back into Xs and moved above 36%. Home Construction stocks were boosted by home sales last week, leading the iShares Home Construction ETF ITB to give a second buy signal and achieve an all-time high earlier this week. The Leisure subsector was another noteworthy group, and it was led by Peloton PTON, which reported better than expected earnings last week and rallied notably off recent lows. Ross Stores ROST also reported positive earnings and rallied to new highs, while William Sonoma WSM fell on earnings and is testing support in the lower-$130s. Chewy CHWY and Abercombie & Fitch ANF both reported positive earnings this morning. CHWY rallied to return to a buy signal, while ANF fell upon fears the company may not be able to sustain its growth. Notable earnings upcoming Thursday and next week include Best Buy BBY (8/29), Lululemon LULU (8/29), and Dick’s Sporting Goods DKS (9/4).
Real Estate – Underweight
Weekly Real Estate Video (2:19)
The real estate sector continued to shine this week. SPDR Fund XLRE returned to a relative strength buy signal against cash (MNYMKT) for the first time since June 2020. Participation also improved - 80% of stocks now trade above their 50-day moving average and 70% trade above their 200-day moving average. Note that both of those readings are now at multiyear highs.
