Recent Articles in Sector Review

Our overweights are still XLF and XLRE. These are both strong Accumulation Models. If we are making a mistake it is that XLRE is too defensive but both XLRE and its Accumulation Model have continued to hit new highs.

Breadth indicators have come down, but sentiment remains a concern. The market has consolidated and may be ready to resume the advance.

XLF may have an inverse Head and Shoulders, along with XLI. There could be rotation into these. This is potentially very strong for these sectors

We still have concerns that Small Cap and the Transports are lagging, but there are signs this will improve in the second part of 2019. Our major trend system remains neutral.

SPY has tested the upper end of our projected high range for 2019. Breadth indicators are overbought, and sentiment remains a concern. The market has corrected and bounced back.

We are seeing some leadership change in IYW, which is healthy. The Accumulation Model has finally started to improve.

IYZ traded through 30, finally, but is below that area once again. This may not get going right away, although Accumulation Models have improved. This sector may have bottomed, but there looks to be less upside potential than in other sectors.

XLRE has held the break out and the Accumulation Model has hit new highs. The reason for the Under Weight in XLE is that the sector has one of the weakest Accumulation Models and is at resistance as oil moves into a seasonally weak timeframe.

XLV is turning into a market leader.

SPY tested the 240-area, where we got slight buy signals. This rally has relieved the oversold and provided a breadth surge. New Highs/New Lows has improved, but sentiment remains a concern and the odds of a retest are higher than most think.

Our Over Weights are now XLF and XLV. These are both strong accumulation models. XLF is now stronger than XLI, our previous overweight, and it has recovered well from the break of 25-area support.

SPY hit the bottom end of our target range at 290. Now, the forecasted pullback and retest are still underway. Last month we thought this was ending, but it has continued, and until %Bears and New Highs/New Lows improve we will remain defensive.

Our Over Weights are now XLI and XLV. These are both strong accumulation models, and XLI is a reasonably strong chart. XLV is turning into a market leader.

Sector Weight Notes: We move XLB and IYW to Equal Weights. We have not made a decision on changes to this report in response to the new XLC.

Sector Weight Notes: No changes in this report. Please read this section for important discussion on the impending sector changes.

Tech is looking tired, and we are concerned that the impending Communications Sector (XLC) is going to have an effect on IYW as well.

SPY is up around three points since the last Sector Review in June, while the first half of 2018 was quite choppy. Improved performance of MDY and IWM suggest more upside is likely from this area, international political turmoil notwithstanding.

We are forecasting a rally into the end of July, and after a pullback there we may revisit sector weights.

SPY is up around two points since the last Sector Review, and February and March were both down months. Improved performance of MDY and IWM suggest more upside is likely from this area, international political turmoil notwithstanding.

We continue with XLI and XLB as overweights. XLI still has the strongest accumulation model of any sector and remains an unpopular choice. We think that growth could come from the Industrial sector in 2018, particularly if there are infrastructure renewal measures.