U.S. Relative Sector Analysis

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High Impact

*Data as of Friday 11 April (Pre-Market, U.S. Trading Session)

Key

Strong: Indicates outperformance relative to SPY.

Neutral: Indicates performance in line with SPY.

Weak: Indicates underperformance relative to SPY.

Overbought: Suggests the sector might be due for a pullback.

Oversold: Suggests the sector might be due for a bounce.

High Bullish Momentum: Strong upward price movement (inferred from approaching overbought after a neutral/strong).

High Bearish Momentum: Strong downward price movement (inferred from approaching oversold after a neutral/weak).

Sector Analysis:

1. Materials vs. SPY:

   • Long Term: Weak

   • Medium Term: Neutral

   • Short Term: Weak

   • Analysis: This sector shows consistent weakness in both the long and short term. The neutral medium term offers a slight respite but is outweighed by the negative signals in the more heavily weighted short term. Overall, the outlook is negative with no clear signs of improvement.

     
     

2. Communications vs. SPY:

   • Long Term: Overbought

   • Medium Term: Strong

   • Short Term: Neutral

   • Analysis: This sector presents a mixed picture. While strong in the medium term, the neutral short term doesn't confirm continued strength. The overbought long-term status adds a layer of caution. The lack of strong short-term momentum suggests the medium-term strength may be waning.

     
     

3. Energy vs. SPY:

   • Long Term: Weak

   • Medium Term: Weak

   • Short Term: Oversold

   • Analysis: This sector shows persistent weakness in the long and medium terms. The oversold condition in the short term suggests a potential for a bounce, but the underlying weakness across longer timeframes indicates caution. Any short-term recovery might be temporary.

     
     

4. Financials vs. SPY:

   • Long Term: Strong

   • Medium Term: Strong

   • Short Term: Neutral

   • Analysis: This sector demonstrates consistent strength in both the long and medium terms. The neutral short term suggests a pause in its outperformance but doesn't negate the established strength. It remains a relatively strong sector.

     
     

5. Industrials vs. SPY:

   • Long Term: Neutral

   • Medium Term: Strong

   • Short Term: Neutral

   • Analysis: This sector shows strength in the medium term, but the neutral stance in both the long and short terms provides no clear directional conviction. The lack of short-term momentum following medium-term strength suggests a potential plateau.

     
     

6. Technology vs. SPY:

   • Long Term: Weak

   • Medium Term: Weak

   • Short Term: Neutral

   • Analysis: This sector exhibits persistent weakness in the long and medium terms. The neutral short term offers no sign of immediate recovery and keeps the overall outlook negative.

     
     

7. Consumer Staples vs. SPY:

   • Long Term: Strong

   • Medium Term: Strong

   • Short Term: Strong

   • Analysis: This sector displays consistent strength across all timeframes, indicating robust and sustained outperformance relative to SPY. This is one of the strongest sectors.

     
     

8. Real Estate vs. SPY:

   • Long Term: Neutral

   • Medium Term: Neutral

   • Short Term: Neutral

   • Analysis: This sector shows neutral performance across all timeframes, indicating it is largely moving in line with the broader market (SPY) without significant out- or underperformance.

     
     

9. Utilities vs. SPY:

   • Long Term: Strong

   • Medium Term: Strong

   • Short Term: Neutral

   • Analysis: This sector demonstrates consistent strength in both the long and medium terms. The neutral short term suggests a pause in its outperformance but doesn't diminish the established strength.

     
     

10. Healthcare vs. SPY:

    • Long Term: Neutral

    • Medium Term: Neutral

    • Short Term: Neutral

    • Analysis: This sector shows neutral performance across all timeframes, indicating it is largely moving in line with the broader market (SPY) without significant out- or underperformance.

      
      

11. Consumer Discretionary vs. SPY:

    • Long Term: Neutral

    • Medium Term: Neutral

    • Short Term: Neutral

    • Analysis: This sector shows neutral performance across all timeframes, indicating it is largely moving in line with the broader market (SPY) without significant out- or underperformance.

      
      

Overall Summary (Weighted by Short Term):

Strongest Sectors:

• Consumer Staples: Consistent strength across all time frames.

• Financials: Strong long and medium term, neutral short term still indicates overall strength.

• Utilities: Strong long and medium term, neutral short term still indicates overall strength.

Weakest Sectors:

• Materials: Consistent weakness in long and short term.

• Technology: Persistent weakness in long and medium term.

• Energy: Weak long and medium term, only short-term oversold offers a potential temporary reprieve.

Neutral Sectors (showing no strong directional bias based on the weighted analysis):

• Communications: Mixed signals, short-term neutrality doesn't confirm medium-term strength.

• Industrials: Medium-term strength not reflected in the short term.

• Real Estate: Neutral across all timeframes.

• Healthcare: Neutral across all timeframes.

• Consumer Discretionary: Neutral across all timeframes.

Conclusion:

Based on the weighted analysis prioritizing the short term, Consumer Staples, Financials, and Utilities appear to be the strongest sectors. Materials, Technology, and Energy show the most pronounced weakness. The remaining sectors are currently exhibiting neutral performance, suggesting they are moving in line with the broader market trends.

Lester Davids

Analyst: Unum Capital