Sector Winners and Losers week ending 3/26There were several change of winners and losers during a week that ended with the S&P 500 at a record close.
Technology (XLK) led for the first two days of the week, was sold off heavily on Wednesday and Thursday, but then ended the week with a huge gain on Friday, putting it in third place.
Utilities (XLU) took over the top spot on Thursday as investors became very cautious and fled to the defensive sector.
Consumer Staples (XLP) remained steady throughout the volatile week and ended the week at the top.
After last week's rout, Energy (XLE) seemed to find a bottom on Tuesday. After a big gain on Wednesday, the sector opened back near the bottom on Thursday, but quickly recovered. But the end of Friday, it was able to end the week with a gain.
Communication Services (XLC) and Consumer Discretionary (XLY) were the only two sectors to decline for the week. Communication Services ended the week at the bottom with more than a 4% decline. Although Technology sector fared well, there is still evidence of rotation from growth to value.
XLE
XLE Potential Gap Fill off of Trendline SupportWith the Suez Canal blockage oil could see further strength moving into next week as supply experiences disruptions (limited supply leads to gains in oil). XLE could see a continued bounce off the trendline support and move to fill the gap denoted by the "X"
Sector Winners and Losers week ending 3/19Inflation, yields and the fed, oh my! The sectors were all over the place this week, all driven by nervousness about an overheating economy and how the fed might react.
Monday started the week with the defensive sector Utilities (XLU) at the top.
On Tuesday, Retail sales data for February showed the economy wasn't overheating and inflation may not be on the rise. That gave investors some confidence and despite bond yields rising, interest rate sensitive sectors such as Technology (XLK) and Communication Services (XLC) rose to the top.
After the FOMC meeting on Wednesday, Jerome Powell acknowledge the increased outlook on the economy for 2021, but made a firm statement that interest rates would not be raised and bond purchasing programs would continue. You can clearly see the spike in Technology and Communications again after 2:00p on Wednesday.
But then bond investors had their reaction on Thursday. As market open approached, bond investors sold heavily in the morning, sending yields on a surge again. Industrials (XLI) did well for most of the day but sold off before close. Only Financials (XLF) ended the day with a gain.
Finally on Friday, bond yields climbed but at a smaller rate with the yield curve flattening a bit. That allowed several sectors to find some upside. Communication Services ended the week at the top sector.
Energy (XLE) was the worst performing sector of the week as crude oil prices plummeted on less demand, losing over 7.5% and dragging down the Dow Jones Industrial average (DJI) with it.
Sector Winners and Losers week ending 3/12It was a wild week for the sectors as investors rotated in and out of Technology and Communications stocks. All sectors ended the week with gains.
Consumer Discretionary (XLY) was the big winner. Large stimulus checks will be delivered soon that are expected to be poured into the economy via consumer spending on both needs and wants.
Technology (XLK) and Communications (XLC) spent Monday at the bottom of the sector list, Tuesday at the top, Wednesday at the bottom, Thursday at the top, and Friday at the bottom. In the end, the two sectors landed just behind the SPX in performance, but did have gains for the day.
Financials (XLF) was also one to watch. It flipped back and forth as investors followed closely what was happening in the bond markets. The increase in yields could be a boon for Financials. The increased yields would have the opposite impact on big technology and communications companies and smaller growth companies. As yields went back and forth, so did the performance of these sectors.
Energy (XLE) ended the week as the worst sector. Although it had a big gain on Wednesday, it wasn't enough to cover the losses on Monday and Tuesday.
Utilities (XLU) and Real Estate (XLRE) did not have any big days, but were on a steady rise throughout the week. They ended the week in 2nd and 3rd place on the list. The two sectors are often used as defensive plays.
Sector Winners and Losers week ending 3/5If you kept your eyes only on big tech and growth stocks, you might have missed that many sectors had fairly good advances this week. The sector chart supports the thesis that there is an outsized rotation in progress that is presenting as a correction, but that there is still a level of support in the broader equities market.
The top two sectors, Energy (XLE) and Financials (XLF), never dipped into negative territory even with Thursday's broad sell-off.
The other cyclical Industrials (XLI) and Materials (XLB) also performed well for the week. Materials was leading for the week at the end of Tuesday, but backed off a bit later in the week.
There was caution visible in the sectors as Utilities (XLU) and Consumer Staples (XLP) advanced.
Investors moved from sectors that are more exposed to pressures from inflation and higher yields. Consumer Discretionary (XLY) and Technology (XLK) were the hardest hit among the sectors. Real Estate (XLRE) is also at the bottom of the list.
At center stage is the bond market sell-off that is driving higher yields. Interest rates that are based on the yields will make borrowing costs higher. Add to that fears of higher inflation would bring interest rate adjustments earlier than initially expected. The higher interest rates benefit big banks that drive the Financials sector higher. But it depresses the net present value that was priced into high growth sectors like Technology.
OPENING (IRA): XLE APRIL 16TH 35 SHORT PUT... for a .93/contract credit.
Notes: With 30-day at 42.1% and expiry-specific also at 42.1%, going out to April (I already have some March on) to sell the 19 delta. 2.76% ROC at max. Just trying to keep theta on and burning. Trade management: run to approaching worthless or, if in the money, look at rolling out for a credit or taking on shares/selling call against (whichever pays more in credit).
Sector Winners and Losers week ending 2/26It's a good week to take a close look at the sectors and see how the market moved around during pullbacks in the major indexes.
Energy (XLE) and Financials (XLF) were joined at the hip, finding themselves at the top of the sector list on Monday and Wednesday and at the bottom of the list on Friday. However the days spent at the top were enough to allow them to end the week in 1st and 2nd place.
However, Energy was the only sector that could keep gains to end the week in the positive.
Consumer Discretionary (XLY) and Technology (XLK) took a beating throughout the week as investors moved away from these sectors fearing the impact of inflation and higher interest rates.
Utilities (XLU) is usually in play when investors are nervous. It showed up at the top of the list on Tuesday and Thursday, but ended the week at the bottom of the list.
The cyclical stocks Industrials (XLI) and Materials (XLB) outperformed the SPX for a second week. Along with Energy and Financials, these cyclical sectors were top performers for the whole month of February.
Sector Winners and Losers week ending 2/19It was a week for the cyclical stocks. Energy (XLE), Financials (XLF), Materials (XLB), and Industrials (XLI) were the only sectors to close the week with gains.
That was not the case for the entire week. Communication Services (XLC) started the week with gains but faded in the last two days.
Utilities (XLU) had one day as the leading sector on Thursday, but moved back to the bottom of the list on Friday.
Health Care (XLV) was the worst performing sector of the week.
Sector Winners and Losers week ending 2/12Energy (XLE) led for a second week in a row as crude oil prices continue to rise and optimism for economic recovery to bring demand back to oil and gas as transportation, travel and leisure sectors bounce back.
Technology (XLK) and Health (XLV) led for Thursday as Energy pulled back for a day. However, Energy bounced back up to the week's highs on Friday.
Consumer Staples (XLP) and Consumer Discretionary (XLY) both lost for the week. Core CPI numbers showed lower than expected inflation and weighed down on the two sectors.
Utilities (XLU) was the bottom sector for the week. There was not much interest in this defensive play for equities this week.
Sector Winners and Losers week ending 2/5Energy (XLE) was back on top for the first week of February. The sector benefited from higher than expected demand in oil that also raise crude oil prices throughout the week.
Technology (XLK) started the week in the lead, having a strong Monday. The Consumer Discretionary (XLY) took the lead on Tuesday. Financials (XLF) briefly moved to the top spot on Thursday, but was soon passed by Energy again.
Health Care (XLV) was at the bottom of the list for the week.
Materials (XLB) was the worst performing sector on Thursday, but led the sectors on Friday.
Dead wrong on Oil, but what now?Obviously my previous predictions on Oil were wrong, however, it is hard to forecast a vicious virus from the far East. Now, the doomsdayers are back, touting their long bond positions with gold, saying "I told you so." Those positions have worked, and oil has tanked. To be clear, I don't dislike bonds or gold here, but Oil is ripe for a rebound. We are deeply oversold, indeed, I believe this sell-off is far overdone. From a pure technical perspective, the RSI is now turning, and MACD looks to be bottoming out. We should retest the ~60 level again, as this was the previous range bound channel crude was trading in. If 50 is broken, this thesis is invalidated and I am dead wrong. We will see.
Sector Winners and Losers week ending 1/29Real Estate (XLRE) and Utilities (XLU) are the top sectors for the week. Ouch!
None of the sectors ended the week with gains as the S&P 500 pulled back -3.31%.
Utilities led as the market opened on Monday morning. Communications (XLC) took a very brief lead on Tuesday, but the Real Estate took the top spot.
Consumer Staples (XLP) attempted to take the lead on Wednesday, but couldn't hold the lead and ended in third place.
Energy (XLE) was the worst performing sector of the week.
The chart clearly shows the wild ride for the sectors on the last three days of the week. Wednesday had all sectors losing for the day. On Thursday, all sectors advanced. On Friday all sectors declined again.
The relatively smooth ride for Real Estate, Utilities and Consumer Staples represents their position as defense moves for investors. All three sectors represent parts of the economy that must continue, even if other parts are recovering slowly or even failing.
Update on XLE: Uptrend test, TA signaling a correctionThe ETF's recovery is starting to show its first cracks as we have dropped from Yesterday's highs and closed without an attempt to buy the dip. Volumes were the around the average for the day and the fall could be mostly a result from long covering.
But there are some technicals that suggest we may return back inside the range. RSI and MACD have bearish crossovers and RIS is also below 50. MACD's histogram is going negative.
Current price is sitting on two major supports and today's price action will be an important one. This is an area for caution.
Sector Winners and Losers week ending 1/22Communications (XLC) led the week with a big +5.44% gain, but only after a big pullback the week prior. The sector was led by Alphabet (GOOGL) and Facebook (FB) with +9.55% and +9.21% gains respectively. Those two companies make up 44% of the ETF. Netflix (NFLX) also had a huge gain of +13.49% but only represents 5% of the ETF.
Technology (XLK) finished the week in second place, also with the mega-caps, Apple (AAPL) and Microsoft (MSFT) contributing the most to the gains.
Financials (XLF) continued to underperform as more financial institutions reported earnings and disappointed investors.
Energy (XLE) was the worst performing sector of the week. There is probably some influence from the new administration policies. However, the more immediate impact was from surprise surplus in oil supplies, signaling much lower demand for oil than anticipated.
The only significant pivots during the week were on Wednesday, January 20th which was inauguration day. That day saw a spike in Communications, Technology and Real Estate (XLRE).
The pivot for Communications and Technology were likely reinvestment into mega-caps that didn't seem to be in the crosshairs of any new policies, alleviating some fears of policies that would hurt big tech.
The Real Estate pivot was driven by the additional assistance for renters proposed in the new stimulus package. The stimulus approved in December only covered the estimated amount of back rent owed, but the new stimulus package would extend rental assistance into the future.
Update on XLE: Potential continuation of the uptrendTaking a look back at XLE we can see that the ETF has returned to test the area of breach of the symmetrical triangle (or the current support of the descending trend line). Pick up in volume shows that the activity has risen and market participants are getting excited. A breach was made a classical follow-up test was made. Currently, we are sitting at the support and overall there was no attempt in Yesterday's market session to push below it. The dip was bought and XLE closed firmly with a fresh high for the day. Even though here RSI and MACD are laying out the perspectives for a deeper correction it may be "skipped". Recovery in energy assets may pull up the ETF away from the support for the uptrend to continue.
My personal view is that trend will continue and XLE will rise, but it won't be wise not to forecast a negative scenario as well.
The outlook will shift to negative if we see a strong push back inside the triangle. Fundamentals are still shaky with the COVID-19 pandemic still raging. This may raise the question of additional lockdowns or stopping global flights again, which will hit oil and energy prices overall.
OPENING (IRA): XLE FEBRUARY 19TH 34 SHORT PUT... for a .71/contract credit.
Notes: Highest background implied on my exchange-traded fund board with 30-day at 40.2%, expiry-specific at 41.6%. I've already got some January stuck out there, so am basically laddering out a smidge by selling the 16 delta out in the February monthly. ROC: 2.13% as a function of notional risk at max; 10.65% annualized at max.