Week In Review: Consumer Cyclicals Bottom Firmly In Place

Despite rising interest rates and climbing oil prices, U.S. stocks advanced during the last week, giving the S&P 500 Index its biggest weekly gain since April.

To summarize last week's action from a technical perspective: the triple bottom formation in the S&P 500 Index remained intact and the yield on 10-Year U.S. Treasury Note broke its downtrend it had formed over the past couple of weeks (see charts below). The main item on this week’s agenda is the start of second quarter earnings season. While the majority of reports really don’t kick in until next week, two big Dow stocks are scheduled to report in the next five trading days. Alcoa (AA) reports after the close on Monday, and General Electric (GE) reports before the open on Friday.

During the last week the Nasdaq climbed 2.4%, followed by the Russell 2000 with 2.2. The S&P 500 added 1.8% and he Dow 1.5%.

Last week’s top performing sectors on a relative basis were the prior weekss poorest performing sectors, Energy and Materials, with a gain of 1.98% and 1.02% respectively. The poor sector performers were last weeks strongest performing sectors, Utilities, with a loss of 0.96%, and Health Care, with a decline of 0.73%. Additionally, mid cap and small cap stocks gained 0.43% and 0.39% against large cap stocks.

The chart of the normalized ratio of the Consumer Cyclicals SPDR (XLY) reveals that the Consumer Cyclicals Sector seems to have found a stable bottom as it recently broke its downtrend and formed a trading range. The Materials Sector (XLB) seems to have made the breakout above its relative highs in the first quarter of the year. The shaded areas represent two standard deviations above and below the SPDR’s 50-day moving average.