Weekly Stats: Watch Your Sectors

Each week we gather some technical analysis statistics on the overall stock market and in particular the S&P 500. This week's post provides some insight into the continued deterioration of the S&P 500 and the performance of the various industry sectors represented in the index.

The following chart is for the week ending June 6, 2008. It gives a breakdown of the industry sectors and the results of running a number of technical indicators on the stocks in each sector. (Click charts to enlarge.)


These stats were captured for a week that ended with a big sell-off on Friday. On the whole, Energy is the strongest sector (no surprise there). Telecom, Utilities and Tech turned in decent performances as well.

This next chart is for the week ending June 13, 2008.


During this week stocks sagged further and then staged a decent rally on Friday. Despite the rally, stocks did not regain much momentum. Now we even see Energy giving ground a bit. In nearly every category we see the percentage of stocks generating bullish indicators has decreased. Even the defensive categories weakened.

Below we have the daily chart of the S&P 500. We can see the failure to cross above the 200-day moving average and the failure of support in the area of 1390 to 1400. We now have a downward sloping trend line that, even with Friday's rally, we are no where near crossing.


The good news is that the S&P seems like it might be holding above support in the 1325 area.

Aroon and DMI show that most stocks in each sector are not exhibiting strong up-trends. The numbers have, for the most part, dropped so low it is reasonable to assume they are over-sold or pretty close to it.

The moving average results, however, still look fairly solid with the exception of the Financial sector and Consumer Discretionary. With more than half of the stocks in each of the remaining sectors still showing their 20-day moving average above the 50-day moving average, there is room for further weakness before the index makes a sustained move upward. On the other hand, the continuing strength in the moving averages despite recent sell-offs might argue that the index has not broken down completely and is poised for gains.

Against a backdrop where most economic reports are less than great but better than awful, I lean toward the bullish camp. The pain in the Financials is a drag on the index as a whole but it is not necessarily detrimental to many individual sectors. As they say, it is a market of stocks...

In any case, at these levels it shouldn't be too risky to be an optimist.