Energy Sector Leads Market Higher

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Includes: DIA, PSI, QQQ, SMH, SPY, USO, XLE
by: Nick Perry

Last week,we saw what I termed as a "stealth downside bias" with the Gold Miners ETF (NYSEARCA:GDX) leading and the SPDR Homebuilders (NYSEARCA:XHB) lagging. This week we see an obvious upside bias (click to enlarge):

More than 80% of my list was higher and the largest gains handily outpaced the largest losses. Oil took the lead as the US Oil Fund (NYSEARCA:USO) gained nearly 5%. Energy-related ETFs, such as the SPDR-Energy (NYSEARCA:XLE), PowerShares Energy Exploration & Production (NYSEARCA:PXE), and iShares DJ U.S. Energy (NYSEARCA:IYE), gained ground along with oil.

Other sectors moving higher this week include Internet, retail, wireless, and materials. The advance in the Internet HOLDRS (NYSE:HHH) has it sitting just below its annual high near 64.

Groups not participating in the rally week are related to semiconductors, bonds, and clean energy. It is the last group, alternative energy, that caught my eye.

As recently as 2 weeks ago I was discussing the appeal of the PowerShares WilderHill Clean Energy Fund (NYSEARCA:PBW), so I am disappointed to see the group post a loss this week. With the headlines abuzz about a new high in oil, I would have thought the alternative energy area would be "re-energized," but clearly that wasn't the case. I am not abandoning my enthusiasm for the group just yet, but a failure to rally when oil is popping seems to offer at least a small warning sign to note.

Index performance this week (click to enlarge):

Index performance year to date (click to enlarge):

Charts: Google Finance

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