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Energy Sector Review: 3/1/21
Energy Energized: There is no question as to where leadership is emanating from in 2021. Below is a chart of the YTD performance of the 11 major S&P sectors. Unless one can not read, it is a glaring difference between the top acting energy space, and the rest. With 2 months complete this year the XLE has easily put up the strongest showing, and it is probably likely to continue. The sector has been the worst performer for 3 years running, and no sector has been the worst behaved 4 years in a row. From 2/1-24 the ETF lost ground just 3 sessions, as it traveled between the round 40-50 numbers. On Thursday the XLE recorded a bearish dark cloud cover candle at more than one year highs. Energy has benefitted from the greenback weakness, and sure enough the UUP rose 1% the last 2 days of the week, and that could be a headwind for the space. I would remain bullish on energy overall, until the dollar can show me some continuous strength.
Technology Sector Review: 2/26/21
Leaders In Retreat: When the leaders start to show fatigue, that is a good sign that markets weakness is coming to a head. The generals are often able to somewhat brush off market instability, and when they do not it should be a sign of concern for investors. Add to that the Nasdaq's volatile behavior, with 2 of the last 3 sessions recording intraday range of at least 500 handles, and it could be a harbinger of things on the horizon. Wide and loose trade are hallmark bearish characteristics, and is also the definition of topping demeanor. Remember bottoming action is the exact opposite with taut, long rounding action. One of the reasons for concern amongst leaders is the action in the chart below of ROKU. It is now quickly into bear market mode, more than 20% off most recent 52 week highs, with the vast majority of that coming this week as the stock is lower by 18% heading into Friday. This is a time to play defense, and be small with plenty of cash on hand. Doing nothing can sometimes be your best strategy.
Materials Sector Review: 2/25/21
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