Weekly Sector and Intermarket Analysis

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

• 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:

• 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