Sunday, December 12, 2010

Weekly Sector Report | 12/10/10

I've been featuring this chart weekly to allow a more 'bird's eye view of the broader market--not just S&P, not just the Dow, not just the NYSE and not just the Nasdaq (Click on all images to make larger).

I highlighted the prominent volume bars.  To my eye, there is some resistance ahead.  But the indexes are made of sectors and sectors of stocks.  As I was reminded in re-reading Mamis's "When to Sell", he notes that at any point in time 1/3 of the stocks are moving up, 1/3 moving down and 1/3 are in a sideways pattern.

A little sector rotation can keep the indices in a range, while several sectors can be flip-flopping about. Nevertheless, it is useful to keep the forest in mind while walking through the trees (and trying to avoid the things that slither about and bite us should we not be looking).  Let's take a look at the broad sectors:

The financial services industries have performed very well.  Banks are still borrowing s-t for next to nothing, and a rise in long term interest rates creates more net interest gains for them. TBT, the double short on TLT, has had impressive gains.  (I've traded in and out of in and I'm currently out).  Perhaps the rotation is out of bonds and into financials?  It is a trade that would make some sense and the charts seem to be showing that.

The Wall Street Journal's Industry page is a great place to look at comparative performance among sectors.  You can find that page by clicking here.  It is a public page, so you shouldn't need a subscription.  If I'm wrong about that, please give me some feedback.  Here's a clip from the YTD performance of the financials:

(source WSJ Industry page)

Of the 17.49% increase YTD experienced by Full line Insurance, almost 1/2 of it came from this week alone.  If you are doing some holiday stock shopping, there are many beaten down stocks in those sectors that might warrant a closer look for your investing/trading style.

For this week's chart book, I've elected to create for you an expanded book that includes WEEKLY charts of all of the subsectors (147).  Why?  Because I was looking at these myself, and I was very interested in seeing where each of the sectors were in relation to pre-crash highs.  It is interesting to see several sectors have surpassed that level.   You can access the report  here  .  It is a large download suitable only for fast connections.  I'm including an abbreviated report (without those schedules) here.