Energy is Leading the Way

As we review the stock market and sectors this week, we have to keep in mind what has taken place in the market over the last few weeks.  If you just look at the S&P 500 for the last 10 trading days, you see a very clear yo-yo action.  And if you look at the broad list of stocks, the hottest stocks have largely been in the Energy Sector, with a few others that have had exceptional announcements. 

 Click to view larger image.

If you look at the chart above, you can see that so far, the most recent market rally has not been able to breakout the internal action of individual stocks trading above their 50-day moving average.  So, this still ranks as a correction.  Furthermore, in the table below, you can see the breakdown of the percentage of stocks currently trading above their 50- and 200-day moving averages in each sector in the combined S&P 400 (mid-caps) and S&P 500 (large-caps).

Table is sorted highest to lowest & > 50DMA.

As you can see in the table above, Energy is definitely leading the pack.  And as expressed in prior insights, the market is mainly being carried by the Energy Sector right now, but many believe that is due to temporary news.  But we've been here before, or at least in an energy-distorted market distortion, and experience shows that it can continue for longer than expected.  But even so, you see that a definite correction is still apparent in "most" sectors and stocks.

To view today's complete Weekly Sector Report, click here.

Don Hays, Nicholas Warf and Justin Wood

Please see important disclosures at the bottom of this page.