All the major indexes powered forward this past week, but we now have three sectors that are controlled by defensive teams. Technology and Telecommunications broke a three-week trend and joined Utilities which continues to show O’s in the right-hand column despite its very high absolute value. Here are the numbers.
Index BPIs: The following table displays the overall direction of seven major U.S. markets as analyzed by bullish percent indicators. Our primary index is first on the list and we pay more attention to the NYSE since it is the broadest measuring tool. Next is the NASDAQ, but it is over-weighted in technology. All indexes moved higher into the over-bought zone (above 70%) with exception of the S&P 100 and it held even. While these markets can move higher or remain above 70% for a long time, eventually we will see a 10% to 15% correction. The fear of such a correction is a little less worrisome for investors using the ITA Risk Reduction (ITARR) and/or Momentum-Optimization Model (MOM). Details of those models are available elsewhere here at ITA Wealth Management.
Sector BPIs: When we drill down into the individual sectors we begin to see wherein the particular strengths and weakness reside. ITA readers who have been following The Feynman Study and related ranking presentations know that sector ETFs such as VCR, VHT, and VFH have been near the top of the list for several weeks. This week two sectors broke ranks and joined the O’s or the defensive team. The percentage drop for Technology and Telecommunications was sufficient to carry then out of the X zone. The absolute values are still high. It is the trend that is showing a little weakness.