US Sector Update: Wednesday, September 29, 2010

In our sector studies, we usually show the trends of relative strength of all sectors, or at least the ones that seem to be noteworthy.  In the bullish phase of an average market juncture, that is an outstanding way to evaluate recommended exposure.  Each week we give the recommended exposure in each sector that is based on a bottom-up observation of the 900 stocks that make up the S&P 500 and S&P 400.  This week, we’re taking a little more introspective approach.  We have graphed each S&P 500 sector to show the percentage of each sector trading above both their 50-day moving average and their 200-day moving average.  We find that this gives a very good picture of the evolution during the recent rally out of that major correction the market has endured since April 2010.  Below, you can see the developments in the best performing sectors. 

The graphs on the left are the percentage of stocks in each S&P 500 sector trading above their 50-day moving average, and the ones on the right are the percentage trading above their 200-day moving average.  Also, the grey line in the background is the price action of the S&P 500 over the same time period.  

                              Percent Above 50DMA                                            Percent Above 200DMA

Don Hays