Stock Market Sectors Vs. S&P 500

I am of the current opinion that the stock market may have made an important reversal Friday.  I believe that the bounce off of the 200 ema (exponential moving average) is important.  I believe that this came on high volume is also important.  I believe we ought to be looking at what sectors might perform better than others in the near future.

I focus on the 200 ema because this level acted as support in the most recent sell off.  I want to see how the sectors behaves around that level as well as their price performance relative to the S&P 500.

Let’s look at the charts and see what we see …

[View with PicLens]

• XLB - Materials - broke through 200 ema, outperforms in up markets - candidate for buying
• XLE - Energy - underperformer who also penetrated the 200 ema - not a buy
• XLF - Financials - performs in line with the overall market - broke thru the 200 ema and should not be bought
• XLI - Industrials - outperformer that did not approach the 200 ema - BUY
• XLK - Technology - underperformed in the sell off, but did not break thru the 200 ema - candidate
• XLP - Consumer Staples - underperforms in the up markets - not a buy now
• XLU - Utilities - underperformer that broke thru the 200 ema - stay away
• XLV - Healthcare - This was an outperformer for the last few months - not just since the Massachusetts election - this is a BUY
• XLY - Consumer Discretionary - the outperformer for much of last year is still flying high - there’s no reason to think that is going to change now - this sector is a market leader and is a BUY

So Industrials, Healthcare and Consumer Discretionary are the buys right now with Materials running as a maybe.

Will I actually be buying?  Unlikely … I just have my 401k .. but what I am doing is putting more of it into stocks relative to bonds and cash.

I guess I should be looking at asset classes too.