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posted on 02 January 2017

Market And Sector Analysis 02 January 2017

Written by , Clarity Financial

Data Analysis Of The Market & Sectors For Traders


S&P 500 Tear Sheet

Thank you for your recent suggestions, while not all requests are possible to fulfill due to data limitations, I do appreciate the input.

Update: As requested, I have added price momentum analysis for S&P 500, 400, & 600 indices.

If you have any suggestions or additions you would like to see, send me an email.


Sector Analysis

Comments

For a second week running, the market struggled but, as opposed to last week's 1.46 point plunge, the market rocketed higher by 3.5 points to finish the week up 0.15%. (#sarcasm alert). Financials continued to lead the charge the last week, and remain extremely overbought. Profit taking remains highly recommended. Small and Mid-cap stocks, Energy, Materials, and Industrials outperformed the index as well. The problem, as stated above, is that a stronger dollar and higher interest rates will likely hamper this optimism sooner rather than later. This is particularly the case with Small and Mid-Cap companies that are the most susceptible to monetary tightening.

(Note: I have changed the sector and major market analysis charts to a 50/200 DMA crossover signal and embedded an overbought/sold indicator.)

The table below shows thoughts on specific actions related to the current market environment. (These are not recommendations, just ideas related to market extremes and contrarian positioning within portfolios. Use at your own risk and peril.)

Over the last couple of weeks, as suggested, we have continued to hedge our long-equity positions with deeply out-of-favor sectors of the market (Bonds, REIT's, Staples, Utilities) which paid off well during the volatility last week.

sector-actions

As I have been warning over the last couple of months, the stronger dollar and the rise in rates should not be dismissed.

Everything is currently pointing to this being a very late stage advance, so profit taking, hedging, and rebalancing is strongly advised.

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