Weekly Sector and Intermarket Analysis

May 19, 2007: 10:16 AM CST

Here are recent charts from StockCharts concerning sector strength/weakness and intermarket relationships between Stocks, Commodities, Bonds, and the US Dollar.

sector-may-19.jpg

  • Energy (oil) prices have risen almost 5% since early April 07, leading the sector pack (which tends to be a negative sign)
  • Consumer Discretionary Spending and Consumer Staples took the hardest hit, loosing 3% each over the last month.
    • This is also negative because consumer spending drives so much of the economy
  • Technology and Industrials trailed gains in Energy.

Intermarket Relationships:

intermarket-may-19.jpg

  • Since the beginning of the year, the Commodity Index has actually outperformed the S&P 500 by a slim margin.
    • This is inflationary from a certain point of view.
  • The Bond prices have remained relatively stable/unchanged since the January.
    • We are seeing a divergence between the S&P and bonds.  Typically, these move together.
    • When bonds and stock prices diverge, this could be an early warning signs
  • The US Dollar Index has suffered the most since the beginning of the year.  This serves to temper gains in the stock market to an extent
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