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Sector Analysis: Watch The Transports For Clues On An April Rally - Week Ending Mar. 31 St , 2017.

|Includes: XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, Consumer Discretionary Select Sector SPDR ETF (XLY)

Weekly Sector Recap

The bifurcation between aggressive and defensive sectors from the previous week gave way to a risk-on sentiment last week. All four aggressive sectors finished the week as relative leaders. All three of the defensive sectors were laggards, finishing behind the S&P 500 benchmark…

It was net positive (bullish) to see all four of economically-sensitive (aggressive) sectors finish last week as relative leaders. On Thursday, all of the aggressive sectors finished as the top four. Perhaps this is a sign the S&P 500 is ready to break out of its recent range-bound funk.

Monthly Sector Recap

Technology and Consumer Discretionary (Cyclicals) were the top two relative leaders for the month of March. Materials were the only other sector to finish the month positive. The S&P 500 essentially finished the month flat with a small loss of 0.04%...

Evidence is surfacing that the Trump rally is unwinding with Financials and Industrials both ending the month negative.

Quarterly Sector Recap

The quarter officially ended on Friday. Technology and Cyclicals were the top two performing sectors for Q1, just as they were for March…

Positive as it was, the quarter still had the appearance of bifurcation. There is clearly indecision by traders and investors on the market's direction. The majority of the relative leaders were the three defensive sectors - Health Care, Utilities, and Consumer Staples.

It's a tug-a-war between risk-on versus risk-off. This battle is keeping the S&P 500 range bound.

Transportation Index Relative Strength - April Fool or April Rally?

The Transports relative weakness to the S&P 500 has been contributing to the large-cap index's recent range-bound weakness (see next chart). Last week's upswing in the Transports relative-strength line is encouraging though. It appears we're at an inflection point with the RS line at resistance and the S&P at support (2360)…

If this negative divergence between the Transports and the S&P can continue to work itself off, an April rally may be in the cards. All of the Transportation industry sub-groups experienced positive finishes last week. Notable were Marine Transportation (+4.44%), Delivery Services (+2.64%), Transportation Services (+2.63%), Railroads (+1.56%), and Airlines (+1.37%).

It's worth revisiting/reviewing the chart from the November 25th blog. It clearly demonstrates that once the RS line of the Dow Transports broke overhead resistance, the Trump rally was on. See the top pane in the following chart…

Thanks for the read…

Previous Instablog's for Reference:

Sector Analysis: Bifurcation And Indecision - Week Ending Mar. 24th, 2017.

Sector Analysis: Keeping An Eye On Transports Ahead Of Fedex Earnings - Week Ending Mar. 17, 2017.

Sector Analysis: Crude Oil Plays Catch-Up With XLE - Week Ending March 10th, 2017.

Sector Analysis: A Split Decision for February - Week Ending March 3, 2017.

Sector Analysis: Defensive Rotation vs. Seasonality & Energy's Divergence - Week Ending Feb. 24, 2017.

Sector Analysis: The (Up) Trend Is Your Friend - Week Ending Feb 17, 2017.

Sector Analysis: Confirming Trends Using Equal Weighted ETF's - Week Ending Feb 10, 2017.

Sector Analysis: Defensive Posturing or February Consolidation? - Week Ending Feb 3, 2017.

Sector Analysis: Materials Sector Finishes Strong & February Sector Preview - Week Ending Jan 27, 2017.

Sector Analysis: Cyclicals And The Transportation Index Say Stay Long- Week Ending Jan 20, 2017.