High Impact: U.S. Relative Sector Analysis

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*Data as of Friday 04 April (Pre-Market, U.S. Trading Session)

Overall Summary (Weighted by Short Term):

Strongest Sectors:

• Financials: Consistent strength across all time frames.

• Materials: Significant improvement and strong short-term performance.

• Healthcare: Improving trend and strong short-term performance.

Weakest Sectors:

• Technology: Significant weakness and strong bearish momentum.

• Energy: Deteriorating performance with a weak short term.

• Consumer Discretionary: Underperformance and lack of improvement.

Sectors with Mixed Signals (Require Careful Monitoring):

• Communications: Overbought long term, strong medium term, neutral short term.

• Industrials: Neutral long term, strong medium term, neutral short term.

• Consumer Staples: Strong long term, overbought medium term, bullish momentum approaching overbought short term.

• Real Estate: Neutral long term, bullish momentum approaching overbought medium and short term.

• Utilities: Strong long term, overbought medium and short term.

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.

• High Bearish Momentum: Strong downward price movement.

Sector Analysis:

1. Materials vs. SPY:

• Long Term: Weak

• Medium Term: Strong

• Short Term: Strong

Analysis: This sector is showing significant improvement. While it was weak in the long term, it has become strong in both medium and short terms. The strong short-term performance, carrying the most weight, indicates a positive outlook.

2. Communications vs. SPY:

• Long Term: Overbought

• Medium Term: Strong

• Short Term: Neutral

Analysis: This sector shows mixed signals. It was overbought long-term, suggesting a potential pullback. However, it's strong in the medium term. The neutral short-term performance, while not negative, doesn't reinforce the strength seen in the medium term. This sector warrants cautious observation.

3. Energy vs. SPY:

• Long Term: Neutral

• Medium Term: Strong

• Short Term: Weak

Analysis: Energy shows a concerning deterioration. While it was neutral long term and strong medium term, it has turned weak in the short term. This reversal, especially in the most heavily weighted short term, suggests potential weakness ahead.

4. Financials vs. SPY:

• Long Term: Strong

• Medium Term: Strong

• Short Term: Strong

Analysis: This sector is consistently strong across all time frames, indicating robust outperformance relative to SPY. This sector shows the most consistent strength.

5. Industrials vs. SPY:

• Long Term: Neutral

• Medium Term: Strong

• Short Term: Neutral

Analysis: Industrials show a similar pattern to Communications. It was neutral long term, strong medium term, and neutral short term. The neutral short-term performance doesn't provide additional conviction, suggesting a need for careful monitoring.

6. Technology vs. SPY:

• Long Term: Weak

• Medium Term: Oversold

• Short Term: High Bearish Momentum / Approaching Oversold

Analysis: Technology is showing significant weakness. It was weak long term and oversold medium term, but the short term shows high bearish momentum and is approaching oversold. This indicates a strong downtrend and potential further weakness.

7. Consumer Staples vs. SPY:

• Long Term: Strong

• Medium Term: Overbought

• Short Term: High Bullish Momentum / Approaching Overbought

Analysis: Consumer Staples is showing mixed signals. While strong long term, it's overbought medium term. The short term shows high bullish momentum and is approaching overbought, suggesting potential for continued strength but also a risk of pullback.

8. Real Estate vs. SPY:

• Long Term: Neutral

• Medium Term: High Bullish Momentum / Approaching Overbought

• Short Term: High Bullish Momentum / Approaching Overbought

Analysis: Real Estate is showing strong bullish momentum in the medium and short terms, both approaching overbought levels. This suggests potential for continued strength but also a risk of a near-term correction.

9. Utilities vs. SPY:

• Long Term: Strong

• Medium Term: Overbought

• Short Term: Overbought

Analysis: Utilities show consistent strength long term, but are overbought in both medium and short terms. This indicates potential for a pullback in the near term.

10. Healthcare vs. SPY:

• Long Term: Neutral

• Medium Term: High Bullish Momentum / Approaching Overbought

• Short Term: Strong

Analysis: Healthcare shows improvement. It was neutral long term, showed bullish momentum in the medium term, and is strong in the short term. This indicates positive momentum and potential for further strength.

11. Consumer Discretionary vs. SPY:

• Long Term: Neutral

• Medium Term: Weak

• Short Term: Neutral

Analysis: Consumer Discretionary is showing weakness. While neutral long term and short term, it's weak in the medium term. The lack of improvement in the short term suggests this sector may continue to underperform.

Conclusion:

The analysis, weighted by the short term, highlights the Financials, Materials, and Healthcare sectors as showing the most promising strength. Conversely, Technology, Energy, and Consumer Discretionary show concerning weakness. The remaining sectors present mixed signals and require careful monitoring for potential opportunities or risks.

Lester Davids

Analyst: Unum Capital