Sector Overview: Relative Strength And Trends

Sector Overview: Relative Strength And Trends

is the stock market going to crash 2015

The Bad:

Financials 

financials

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Financials are breaking down.

Perhaps some are starting to worry about what the impact of “longer” term, low oil prices will have on overly leveraged hedge funds…

 

 

 

Energy:

energy

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No surprises here. Energy is still getting crushed.

Notice the recent MACD crossover. This could be the start of a much larger decline in this sector.

 

 

 
Materials:

materials

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A pickup in hiring as shown in the December jobs report may not last long. Investors seem to not be impressed with recent job trends and the amount of workers leaving the workforce.

Historically, the material sector is a weak performer in January, as well.

 

 

 The…Still Holding On

Consumer Discretionary:

consumer disc

 

 

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We are starting to see a breakdown of the multi-month upward trend, while we are still seeing negative relative strength vs the S&P 500 Index.

Consumers don’t seem to be positively responding to lower gas prices when purchasing non-staple items.

 

 

 

Consumer Staples

staples

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The consumer staples sector continues to rise as hopes of low gas prices will translate into more spending money — especially among blue collar workers.

 

 

 

 

Industrials:

INDUSTRIALS

 

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Industrials are looking weaker.

Watch to see if current support levels hold. If not, it might be a sign that the market wants another round of QE from the Fed.

 

 

 

 

The Good

Health Care:

xlv

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Generally viewed as a defensive sector during declining markets, money seems to be flowing back into healthcare after missing out on the year-end rally of 2014.

 

 

 

 

 

Technology:

tech

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Watch the technology sector closely here. A breakdown in this sector indicates that momentum traders are reducing leverage and moving to the sidelines.

Note the continued negative divergence that has been in place since December.

 

 

Utilities:

xlu

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Utilities continue to rise as interest rates are still falling. Typically utility companies carry a large amount of debt.

Hopes of a more dovish Fed in 2015 (than what is anticipated) are keeping utility companies’ stock prices on the rise.

 

 

Note: I/my clients may be long XLU, XLV, XLK, XLP

Questions? Thoughts?

 

Feel free to leave a comment below or you can reach out to me privately here.

Thanks,

John Rothe

CEO & Chief Investment Officer

Riverbend Investment Management

 

 

 

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Top Image: http://www.freeimages.com/profile/fcl1971

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