Which S&P Sectors are Over-Performing, and which are Under-Performing?
The S&P 500 has been on a 3-day bullish run and the overall bullish trending has solidified. Over the last week it is up +3.6% which is good. Looking at which of the sectors are over-performing and which are under-performing:
The Energy sector - XLE - is trending bearish and is down -6% over 1 month. Over the last week though it is trying to come back. So, I would not try and play the short side. Just leave it alone for now.
The Metals and Mining sector - XME - is trending bearish and is down -5% over 1 month. No action.
The Financials - XLF - is trending bullish and up +5% over 1 month. This is certainly a good candidate to play for the upside. With the Fed expected to keep raising interest rates, expect the Financials to continue to do well.
The Industrials - XLI - is trending bullish and up +4% over 1 month. Not sure if there is any particular catalyst for it to go up other than general markets trending higher. So, will not focus on this.
The Materials - XLB - is trending bearish although it is up +1% over 1 month. I am going to leave it alone for now - no trade.
The Transports - XTN - is trending bullish and up +7% over 1 month. It was down yesterday with the markets generally being up. Watch for now.
The Utilities - XLU - is trending bearish but up +4% over 1 month. Not sure what to make of this. Is it signaling for the market to decline? Usually, I see Utilities as a leading indicator of market reversals. So, need to watch this.
The Healthcare - XLV - is trending bullish (barely at this point) and is up +6% over 1 month. I am long CURE which is 3x leverage of the Healthcare. It has been choppy and not done much over the last 2 weeks. I will need to decide if I stick with this sector or change (maybe to Financials).
The Consumer Discretionary sector - XLY - is trending strongly bullish and is up +11% over 1 month. The price trending is straight up over the last 7 days. The RSI (Relative Strength Indicator) is the highest it has been for the year. So, perhaps a pullback is on the cards?
The Real Estate sector - XLRE - just turned bearish per my system although the price has gone up +6%. Not sure how real estate will play out. Going to watch for now.
The Retail sector - XRT - has turned bullish and is up +6% over the last 1 month. I am going to watch this sector, not taking any action for now.
The Technology sector - XLK - has been strong bullish and is up +9% over the last 1 month. I am long TQQQ which is 3x leverage the QQQ and also use the QQQ options to play the trends in the sector. Note that the QQQ is up similar to XLK.
The Homebuilders sector - XHB - turned bullish 2 weeks back per my system and is up a whopping +18% over 1 month. That is a huge move and remains to be seen if it can keep it up. Perhaps a short-term play for a reversal is on the cards using options.
The Semiconductors sector - XSD - turned bullish earlier this week and is up +11% over 1 month. I like this sector and will likely get in either with SOXL which is a 3x leverage of the sector or with XSD calls depending on volume.
The Biotech sector - XBI - is on a strong bullish trend and is up +20% over 1 month. I have been playing the XBI call options over the last 2 weeks and been successful with the trade. I got in again on August expiry calls when the XBI was weak yesterday. But this could be a long-term bullish trend and I should consider using LABU to play the space. LABU is the 3x leverage of the Biotech sector. The ARK Biotech fund ARKG has also done very well.