The image below is from our Trend Analyzer tool and shows the current levels of major US indices relative to their trading ranges. You don’t have to look long to see that there’s currently quite a lot of uniformity in US indices as they are all just into overbought territory. The one outlier, if you can call it that, is the Micro-Cap ETF (IWC), which is just slightly more overbought than everything else.
The Micro-Cap ETF is also leading in terms of performance over the last week with a gain of over 2%, and right behind IWC, four other ETFs have seen gains of over 1%, including the Rusell 2000 (IWM) and Nasdaq 100 (QQQ). While the IWM has been a laggard for much of the year and is playing catch up, QQQ has risen more than any other index gaining over 33%.
While there has been a lot of uniformity among indices recently, on a sector basis, we have seen a lot more dispersion as five sectors are overbought, five are neutral, and one (Real Estate) is oversold. Technology (XLK) has been a leader over the last week gaining 1.7%, while Materials (XLB), Financials (XLF), Industrials (XLI), and Energy (XLE) are all up over 1%. On the downside, Real Estate (XLRE) is down over 1%, and Utilities (XLU) is down 0.22%. These two sectors are also the only ones below their 50-DMAs as investors have embraced more of a risk-on attitude while shunning defensive, income-oriented sectors. One positive for both sectors? Both currently have “Good” Timing scores in our Trend Analyzer. Start a two-week free trial to Bespoke Institutional to access our 2020 Outlook Report, interactive tools, and much more.