Below is a look at our custom trading range charts for the ten main S&P 500 sectors (Real Estate not yet included). In each chart, the white line represents the sector’s 50-day moving average, while the light blue shading represents its “normal” trading range. This area represents between one standard deviation above and below the 50-day moving average. More volatile sectors will have wider trading ranges, while less volatile sectors will have tighter trading ranges. The red shading represents between one and two standard deviations above the 50-day, and moves into or above the red zone are considered “overbought.” The green shading represents between one and two standard deviations below the 50-day, and moves into or below the green zone are considered “oversold.”
Where applicable, we’ve included trend lines to show uptrends, downtrends, sideways trends, breakouts, or breakdowns.
Going through the various sectors, you can see that Consumer Discretionary recently bumped up against the top of its uptrend channel and pulled back. Consumer Staples recently broke above key resistance and has now pulled right back to that level which is acting as support.
The Energy sector has been trending down all year, and it just recently broke to a new 52-week low.
The Financial sector has been trending sideways for all of 2017. We wouldn’t be aggressively long until it breaks out to a new 52-week high. If it breaks below the bottom trend channel that we’ve drawn, look out below.
Health Care’s chart looks somewhat like a bullish cup and handle formation, and when it finally broke above resistance this week to make a new 52-week high, it broke out hard. The chart for Industrials is about as slow and steady to the upside as it gets. Both Materials and Technology look solid as well. After a draw-down of a few percentage points from overbought levels, Tech pulled back to its 50-day and has thus far held support nicely.
Finally, Telecom remains in a downtrend channel and is approaching 52-week lows, while Utilities has been slowly trending higher all year.