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Economic Announcements have Favourable Impact on Market

The market registered gains last week due to a flurry of mostly favourable economic announcements. If foreign problems stay out of the news for a while, maybe the market can resume its upward direction this week.

Technology, the Most Positive Industry

The one place where fundamentals and sell-side sentiment seem to be in great accord is Tech. The sell-side sentiment in Tech popped a big 6% last week, the same as the week before. Tech has now been in a strong upward channel for over two months. It has clearly broken out the prior seven-month flattish channel. The current peak in sell-side sentiment for Tech is near the peak recorded before the economic downturn. The sell-side is strongly suggesting to their buy-side clients that Tech is the place to be. That could prove to be true, even if the economic recovery in the U.S. slows down.

Sell-side Sentiment in Consumer Services Remains Strongly Positive

Sentiment for Consumer Services was barely above flat last week and hasn’t changed much in recent weeks, but it is still very much in the strong upward trend that began in October 2008. No reason yet to get off this train.

Telecomm and Industrials are the Leading Candidates to Establish Positive Trends

After a huge drop in December 2009 in sell-side sentiment for the Telecomm industry, the rebound that began in mid-January 2010 continued with an impressive 4% gain last week. Industrials also appear to be breaking out on the upside, restoring what are now a three-month uptrend and a broader 12-month trend. Sell-side sentiment for Industrials is now at the highest level since January 2008. It may be time to consider both of these two industries.

The Financial Industry Remains at the Bottom

Sell-side sentiment for Financials took another big hit last week with a 7% drop. There appears to be no hope for a reversal of the sharp downtrend that began in December 2009.

Stocks to Watch

Over the last week, the following stocks had the largest bullish and bearish sentiment shifts amongst the sell-side.

Bullish:

Symbol

Company
Industry
Exchange
US Steel Corp Ord Shs
Basic Materials
NYSE
Wells Fargo & Company Ord Shs
Financials
NYSE
Medco Health Solutions Ord Shs
Health Care
NYSE
EnergySolutions Ord Shs
Industrials
NYSE
GSI Commerce Ord Shs
Consumer Services
NASDAQ

Bearish:

Symbol

Company
Industry
Exchange
MOT
Motorola Ord Shs
Technology
NYSE
RIMM
Research In Motion Ord Shs
Technology
NASDAQ
RTP
Rio Tinto ADR Each Reptg Four Ord Shs
Basic Materials
NYSE
Yamana Gold Ord Shs
Basic Materials
NYSE
LifePoint Hosptl Ord Shs
Health Care
NASDAQ

Until next week …

Disclosure: No positions

Source: Weekly Street Sentiment: Sell-Side Still Bullish on Technology