Sector leadership is providing little support for the indexes.
New lows collapse but new highs are scarce.
Sector level trends reveal the challenge for the indexes at this point. Energy and Utilities are the only sectors in longer-term up-trends at this point. Even if we expand strength to include the Materials sector (which with the other two are seeing strong trends in our shorter-term price, momentum, breadth model), we are only talking about 10% of the overall S&P 500.
To put it another way: even after the 60+% rally in XLE (Energy ETF) this year and broad weakness elsewhere, there are still three individual companies (AAPL, MSFT, GOOGL) with a larger market capitalization than the entire S&P 500 energy sector. The craziest stat in this regard may be the comparison between Energy and TSLA. Pre-COVID, Tesla’s market capitalization was ~5% of the entire Energy sector. It peaked above 120% last year and even after this year’s moves is still at 50%.
