Notable technical developments from Industrials, Utilities, Discretionary, Staples, Real Estate, Materials, Healthcare, & Energy.
U.S. Sector Updates
The past week saw no significant technical developments in the Communication Services, Financials & Technology 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 5/21/25. Sector designations are based on DALI sector rankings and are as follows: 1 - 3 overweight, 4 - 7 equal weight, and 8 - 11 underweight.
Note that all Sector Updates can be found in the Research Hub under "Domestic Equities". Click here for more information about our newest research offering. This new view provides a much cleaner display for the Sector Commentary & Videos, while also allowing us to update the commentary any day. This report article will be phased out at the end of May, but the same timely commentary will continue to be available on the Research Hub.
Industrials – Overweight
Weekly Industrials Video (4:07)
The broad industrial group remains quite strong as we rocket into the close of May. Roughly seven of every ten industrials stocks trade above their near-term 10-week moving average evidenced by indicator (^BPECINDUST), watch for follow through to bullish percent & positive trend charts. Broad representative XLI has improved nicely off 2025 lows and is challenging notable resistance on its default chart above. Waste Management, Inc. (WM) reversed higher on its default chart and remains a strong option for more defensive minded exposure. DY and GFF have improved notably and are points of strength within a relatively poor small cap backdrop. Keep in mind both options can move around quickly, so exercise caution in position sizing.
Utilities – Equal Weight
Utilities led the broad eleven sectors during the past week’s worth of trading with (XLU) and (RSPU) rallying 3.9% and 3.5% respectively. XLU matched its all-time chart high on its default point and figure chart during Tuesday’s (5/20) trading, while RSPU initially rallied to a new chart high late last week before improving on those highest this during trading on 5/20. The 10-week indicators for both the gas (^TWGUTI) and electric (^TWEUTI) reversed back into Xs during the past week as stocks moved back above their 50-day moving averages. Oklo Inc. (OKLO) had notable earnings last week, reporting a narrower loss, which lead the stock to rally back into a positive trend and climb to a 4 technical attribute rating.
Discretionary – Equal Weight
Weekly Discretionary Video (3:59)
Discretionary stocks were flat over the past week with (XLY) rising 35 basis points, while RSPD was up 3 basis points. The broader discretionary bullish percent (^BPECCONCYC) moved to bull confirmed status after reaching 42%, marking the highest chart level since December 2024. Walmart (WMT) reported earnings during last week’s trading, beating most metric, but citing the potential rise in prices due to tariff concerns. The company grew ire from President Trump, but nonetheless, the technical picture for the stock remains sound. WMT maintains a 5 technical attribute rating and is on a buy signal on its trend chart. Home Depot (HD) reported earlier this week and while seeing a rally day of, the stock continues to maintain a 2 technical attribute rating. (TJX) also reported earning and, much like Walmart, continues to maintain its positive technical picture. Target (TGT) and V.F. Corporation (VFC) both missed on earnings, negating recent rallies in low technical attribute names within the retailing industry.
Staples – Equal Weight
It was a strong last week for the Consumer Staples group, with Select Sector SPDR Fund XLP gaining 3.3%. Risk-on movement within the market has resulted in a relative decline of Staples, as XLP now holds an unfavorable fund score of 2.63, in addition to a negative score direction of 1.75. The sector held onto its 7th rank in DALI, but it’s now only 3 signals away from being overtaken by Basic Materials. Staples is trending in the wrong direction and there are other areas of the market that appear stronger. Rollins (ROL) and Altria Group (MO) are two high attribute names in the sector for those needing more exposure.
Materials – Underweight
As has been the case for last few months, the technical picture for the broad materials sector remains unfavorable as the sector ranks in the bottom half of the DALI rankings and the Materials Select Sector SPDR Fund (XLB) has a weak fund score below 1.0. Within the sector, however, precious metals remain one of the strongest areas of the market; the VanEck Gold Miner's ETF (GDX) is up more than 40% year-to-date and has a fund score north of 4.5.
Real Estate – Underweight
The Real Estate outperformed the S&P 500 (SPX) by 1% last week, with Select Sector SPDR Fund (XLRE) gaining 1.9%. However, the sector remains lacking from a long-term relative strength perspective. The sector held its 9th rank in DALI and holds an unfavorable 2.55 average score within Asset Class Group Scores. Weight of the evidence continues to be against the sector, making it one to underweight for the time being. Those needing some exposure could look towards Simon Property Group (SPG), which is a strong 5 for 5’er on a potential pullback opportunity.
Healthcare – Underweight
Healthcare saw some short-term improvements over the past week. On the Asset Class Group Score page, the sector’s average score moved up from 1.07 to 1.22. However, the healthcare sector did lose some signals in DALI, moving from 73 to 65, yet remained in the 10th position. The Ten Week for Healthcare (^TWECHEALTH) reversed into Xs last week and continues to move higher, adding an additional box on Tuesday and reaching a current Chart Level of 48%. After breaking a spread triple bottom last week, the Health Care Select Sector SPDR Fund (XLV) reversed into a column of X’s on Monday. Despite the improvement, XLV is still on a sell signal and maintains a fund score of 1.33, well below our actionable threshold of 3.0. Continue to underweight Healthcare in your portfolio for the time being. Within healthcare there still exist opportunities. McKesson Corporation (MCK) is on its 4th consecutive buy signal, having completed a bullish triangle at the end of last month, and is now forming a spread-triple top at its all-time high of $728. MCK has a perfect 5/5 TA score and has been on a market RS buy signal since 2022.
Energy – Underweight
There as been little change in the relative strength picture for energy over the short-term. The Energy Select Sector SPDR Fund (XLE) reversed down on its default chart this week after unsuccessfully testing its bearish resistance line. While XLE has shown modest improvement recently, completing two consecutive buy signals on its chart, it has an unfavorable fund score and energy remains at the bottom of the DALI sector rankings. Meanwhile, crude oil sits on a sell signal and in a negative trend near multi-year lows.
