The Strongest & Weakest Sectors
- Lester Davids
- 23 minutes ago
- 5 min read
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Coming into last week, our conclusion was as follows: Based on the weighted analysis, the Platinum Miners sector shows the most positive short-term outlook. Conversely, the Insurers, Coal Miners, Chemicals, Technology, and Telecoms sectors appear to be facing the most significant short-term headwinds. Several other sectors present mixed signals and warrant close attention to see if short-term neutrality evolves into a clearer trend. The consistently overbought condition of the Gold Miners sector suggests a potential near-term correction.
By the close of the week, equally-weighted Platinum miners had outperformed the Top 40 Index by 6.7% while Gold miners underperformed the Top 4o index by 4.2%.
New data after the close of trade on Thursday, 17 April.
Overall Summary (Weighted by Short Term):
Strongest Sectors: Gold Miners, Platinum Miners, Consumer Staples, Hospitals
Weakest Sectors: Technology, Consumer Disc., Paper & Pulp, Chemicals, Luxury Goods
Mixed/Neutral Sectors (Require Careful Monitoring): Miners, Banks, Insurers, Healthcare, Coal Miners, Telecoms
Legend Interpretation:
Strong: Generally a buy signal.
Neutral: Hold, or be cautious.
Weak: Generally a sell signal.
High Bearish Momentum/Approaching Oversold: Potential for a short-term bounce or reversal, but still bearish overall. Consider buying cautiously for short-term gains, but be aware of the overall weakness.
High Bullish Momentum/Approaching Overbought: Potential for a pullback or correction. Consider selling or taking profits, as the bullish momentum might not be sustainable.
Oversold: Potential for a short-term bounce or reversal. Consider buying for short-term gains.
Overbought: Potential for a pullback or correction. Consider selling or taking profits.
Sector Analysis:
Technology vs Top 40:
Long Term: Weak
Medium Term: Neutral
Short Term: Weak
Analysis: This sector shows consistent underperformance, with weakness in both the long and short terms. The neutral medium term is not enough to offset the negative signals from the higher-weighted short term. This sector indicates continued weakness.
Miners vs Top 40:
Long Term: High Bearish Momentum / Approaching Oversold
Medium Term: High Bearish Momentum / Approaching Oversold
Short Term: Neutral
Analysis: This sector shows significant bearish momentum in the longer and medium terms, suggesting potential for a bounce given the approaching oversold conditions. However, the neutral short term doesn't yet confirm this. Overall, the strong downward momentum carries significant weight, indicating continued pressure.
Banks vs Top 40:
Long Term: Neutral
Medium Term: Weak
Short Term: Neutral
Analysis: This sector presents a slightly negative outlook due to the weak medium-term performance. While the long and short terms are neutral, the medium-term underperformance suggests potential for continued sideways to slightly negative movement.
Insurers vs Top 40:
Long Term: Neutral
Medium Term: Weak
Short Term: Neutral
Analysis: Similar to Banks, this sector leans slightly negative due to the weak medium-term performance. The neutral long and short terms are insufficient to suggest any significant positive momentum.
Gold Miners vs Top 40:
Long Term: High Bullish Momentum / Approaching Overbought
Medium Term: High Bullish Momentum / Approaching Overbought
Short Term: Strong
Analysis: This sector shows significant bullish momentum across all time frames, with strong short-term outperformance. The approaching overbought conditions in the longer and medium terms suggest caution for a potential pullback, but the strong short-term performance, carrying the most weight, indicates continued positive momentum.
Platinum Miners vs Top 40:
Long Term: Neutral
Medium Term: Strong
Short Term: Strong
Analysis: This sector demonstrates positive momentum, with strong performance in both the medium and short terms. The neutral long term doesn't detract from the positive signals in the more heavily weighted shorter time frames, indicating a positive outlook.
Consumer Staples vs Top 40:
Long Term: Neutral
Medium Term: Neutral
Short Term: Strong
Analysis: This sector shows positive momentum driven by strong short-term outperformance. The neutral signals in the longer and medium terms don't counter the positive indication from the most heavily weighted short term.
Consumer Disc. vs Top 40:
Long Term: Weak
Medium Term: Weak
Short Term: Neutral
Analysis: This sector indicates continued underperformance, with weakness in both the long and medium terms. The neutral short term doesn't provide any positive indication, suggesting ongoing challenges for this sector.
Healthcare vs Top 40:
Long Term: High Bearish Momentum / Approaching Oversold
Medium Term: High Bearish Momentum / Approaching Oversold
Short Term: Neutral
Analysis: Similar to the broader Miners sector, Healthcare shows significant bearish momentum in the longer and medium terms, approaching oversold conditions. The neutral short term doesn't yet signal a reversal, and the strong downward momentum in the higher-weighted longer and medium terms suggests continued pressure.
Hospitals vs Top 40:
Long Term: Weak
Medium Term: Neutral
Short Term: Strong
Analysis: This sector shows improvement due to the strong short-term outperformance. While the long term indicates weakness and the medium term is neutral, the positive signal from the most heavily weighted short term suggests potential for continued positive momentum.
Coal Miners vs Top 40:
Long Term: High Bearish Momentum / Approaching Oversold
Medium Term: High Bearish Momentum / Approaching Oversold
Short Term: Neutral
Analysis: This sector mirrors the bearish momentum seen in Miners and Healthcare, with significant downward pressure in the longer and medium terms, approaching oversold levels. The neutral short term doesn't yet indicate a shift in this trend.
Telecoms vs Top 40:
Long Term: Neutral
Medium Term: Neutral
Short Term: Neutral
Analysis: This sector shows a consistently neutral performance across all time frames, suggesting it is likely to continue performing in line with the broader Top 40 index.
Paper & Pulp vs Top 40:
Long Term: Oversold
Medium Term: Weak
Short Term: Weak
Analysis: This sector indicates continued weakness. While the long term is oversold suggesting a potential bounce, the weakness in both the medium and short terms, with the short term carrying the most weight, points towards ongoing underperformance.
Chemicals vs Top 40:
Long Term: Oversold
Medium Term: High Bearish Momentum / Approaching Oversold
Short Term: Weak
Analysis: This sector shows significant downward pressure. The oversold long term suggests a potential for a bounce, but the high bearish momentum in the medium term and the weakness in the short term indicate continued underperformance in the near term.
Luxury Goods vs Top 40:
Long Term: Neutral
Medium Term: Weak
Short Term: Weak
Analysis: This sector indicates a negative outlook due to the weakness in both the medium and short terms. The neutral long term is not enough to offset the negative signals from the more heavily weighted shorter time frames.
Conclusion:
Considering the weighted approach, the Gold Miners, Platinum Miners, Consumer Staples, and Hospitals sectors show the most promising short-term strength. Conversely, Technology, Consumer Discretionary, Paper & Pulp, Chemicals, and Luxury Goods appear to be facing continued weakness. The remaining sectors present mixed or neutral signals, requiring further observation to determine potential future performance.
Lester Davids
Analyst: Unum Capital
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