Weekly Market Review: March 22, 2009

We have touched the 800 point on the S&P500 and bounced back as everyone expected.  We are still within [last week’s predicted trading range between 750 – 800][].  Even though talks of optimism are appearing, we still haven’t been able to break the downtrend since October, see Figure 2.   In fact, I unloaded my TCK longs just after the test of 800.  I am now focusing on finding my best bets for the next leg up.

Rather than ending here as usual, I will analyze the various GICS sectors to get a better view of the market.

[caption id="attachment_1112" align="aligncenter" width="500" caption="S&P 500"]S&P 500[/caption] [caption id="attachment_1113" align="aligncenter" width="500" caption="S&P 500"]S&P
500[/caption]

GICS SECTORS REVIEW

Below are the 6-month, 1-month, and 1-week graphic comparison of the performance of GICS10: energy (XLE), GICS15: materials (XLB), GICS20: industrials (XLI), GICS25: consumer discretionary (XLY), GICS30: consumer staples (XLP), GICS35: healthcare (XLV), GICS40: financial (XLF), GICS45: technology (XLK), GICS:50 telecommunication (IYZ), and GICS55: utilities (XLU).

Evidently, the ball is with the financials for the past few months.  They have led the turn down (6-month chart) and also the bounce (1-month chart).

On Wednesday, Financial again were leading the pack in the rally.  However, Energy kept the ball rolling on Thursday while the Financial were drifting down.  At the other end of the spectrum, Healthcare and Utilities are against the flow as usual.

[caption id="attachment_1114" align="aligncenter" width="500" caption="6 month: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"]XLE XLB
XLI XLY XLP XLV XLF XLK IYZ XLU[/caption] [caption id="attachment_1115" align="aligncenter" width="500" caption="1 month: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"]1 month: XLE XLB XLI XLY
XLP XLV XLF XLK IYZ XLU[/caption] [caption id="attachment_1116" align="aligncenter" width="500" caption="1 week: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"]1 week: XLE XLB XLI XLY XLP XLV XLF XLK IYZ
XLU[/caption]

In terms of guessing what’s to come next week.  Let’s take a closer look at the financial.  As you can see, we’re hanging by a tread right at the support at the moment.  So if XLF is to break this support here, it’s going to take the whole market with it.  Then, we’ll be breaking the 750 support for the S&P 500 and go back to the 600’s range as I’ve been saying for the past 2 weeks.  This is definitely one scenario which I don’t like it to happen.  As always, let’s see how the market acts next week and go with the flow.  Again, watch the 750 and 800 zones.

[caption id="attachment_1117" align="aligncenter" width="500" caption="Financial Select SPDR ETF"]Financial Select SPDR
ETF[/caption]

[last week’s predicted trading range between 750 – 800]: http://www.quantisan.com/market-weekly-review-march-17-2009/

Posted 22 March 2009 in stocks.