Now that the train has left the station, destination bull-ville, I thought it would be beneficial to examine the best performaing sectors in which to put your money for the next couple of weeks. Today’s significant bullish move points to continued bullishness in the broader indexes for the forseeable future, from a technical standpoint of course!
Sector Ranking and Analysis
After today’s strong move upward, Consumer Cyclials have taken over Technology as the strongest performing sector over the past 13 weeks. Here is the complete listing of sector rankings based on 13 week relative stength:
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Consumer Cyclical
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Technology
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Basic Materials
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Transportation
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Services
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Captial Goods
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Energy
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Healthcare
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Utilities
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Consumer Non-Cyclical
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Financial
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Conglomerates
Let’s take a look at the top 5 sectors to see which has the most upside potential left for a rally!
Consumer Cyclial
For the consumer cyclical sector, I have chosen two exchange traded funds:
Below is the Ino.com trend analysis for the Consumer Discretionary SPDR -XLY. If you would like to analyze the trend score for any stock you’d like, just click on the trend analysis link above.
Chart:
There are several things going on in the chart for Discretionary stocks. This industry group is looking very top heavy, however, unlike the broader indexes, the XLY actually closed down during today’s big really on above average volume. You can see the upward trend channel starting to collapse unde rthe pressure of the rally. I think this sector is headed lower over the next week or two before resuming its uptrend.
Below is the Ino.com trend analysis for the Consumer Staples SPDR -XLP. If you would like to analyze the trend score for any stock, index, future, or mutual fund you’d like, just click on the trend analysis link above.
Chart:
The Trade Triangles appear in an interesting pattern on XLP. Notice since the green monthly triangle appeared in May, 2009, each subsequent weekly red / green triangle pair has occurred within 15 trading days. XLP could go either way; it current has found support at the 50 day EMA, which is the line in the sand for XLP. If this level holds, XLP has upside potential above $27
Technology
For the technology sector, let’s take a look at the Technology Select Sector SPDR – XLK
Below is the Ino.com trend analysis for the Technology SPDR ETF – XLK. If you would like to analyze the trend score for any stock, index, future, or mutual fund you’d like, just click on the trend analysis link above.
Chart:
With three green trade triangles, the technology sector looks to be in good shape for the bulls. Todays solid break through 23 looks to send technology all the way up to 25+. With no divergence in RSI or MACD to be seen, the technology sector looks very strong for at least the next two weeks.
Materials
Let’s take a look at the Materials Select Sector SPDR – XLB
Below is the Ino.com trend analysis for the Materials SPDR ETF – XLB. If you would like to analyze the trend score for any stock, index, future, or mutual fund you’d like, just click on the trend analysis link above.
Chart:
Easily the most bullish of all the charts, the materials sector looks like it has room to run from here. 33.61 is support, and XLB could easilly run to 40. Look for the 12/26 MACD to set new highs as XLB climbs above 34.
Transports
For the transports, I examined the iShares Dow Jones Transportation Averge ETF – IYT
Below is the Ino.com trend analysis for the iShares Dow Jones Transportation Averge ETF. If you would like to analyze the trend score for any stock, index, future, or mutual fund you’d like, just click on the trend analysis link above.
Chart:
The transports sector is looking quite bullish. Last week the sector broke above its 200 day EMA, and backtested it on friday. A break above 75 would leave the transports with significant room to run, with a short term target of 80, and a mid term target of 85. A break below the 200 day ema should be used as a sell signal / stop.
Services
The only good ETF for tracking the services sector is the iShares Dow Jones U.S. Consumer Services Sector Index Fund – IYC
Below is the Ino.com trend analysis for the iShares Dow Jones U.S. Consumer Services Sector Index Fund. If you would like to analyze the trend score for any stock, index, future, or mutual fund you’d like, just click on the trend analysis link above.
Verdict
If you are looking for a safe bet: Invest in materials, or technology over the next two weeks. If you prefer higher risk, high reward, check out the transports.
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