Week In Review (04-24-20)

From the desk of Steve Strazza @Sstrazza

For the week ended Friday, April 24, 2020:

Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.

This week we want to highlight the continued divergence between Energy stocks and Oil using our Sector and Industry ETF and Commodity tables.

First, let's look at some of the longer-term leaders. Biotechs (IBB) just broke out to fresh multi-year highs and are one of the top performers on our Industry ETF list across all timeframes.

Aside from Gold Miners (GDX), they are the only industry on our expanded list of over 50 ETFs already back at fresh 52-week highs. Definitely some relative strength worth paying attention to in these areas.

Be sure to read our recent post on Gold Miners.

This week we saw a huge gain from not only the strongest Industry ETF over the trailing year (GDX) but also the weakest, as Exploration & Production (XOP) rallied 11%. While still down 62% over the trailing year, XOP is now up a whopping 37% and leading our list over the trailing month.

These industry groups' underlying Commodities continue to trade in opposite directions though... which is nothing new as Gold is now up 35% and Crude Oil down 73% in the past year.

Gold is trading near multi-year highs and leads our Commodities list not just this week, but across all timeframes. Meanwhile, Crude Oil continues to crash and is lagging across all timeframes. It made history early this week when the front-month futures contract plunged below zero.

This is a good example of why not to overcomplicate intermarket analysis. Despite the weakness in Crude Oil, investors seem to be warming towards Energy stocks as a group.

Here is our Sector ETF watchlist.

We can see the same trend here as in our Industry ETF table. Energy outperformed with a 2% gain while 9 of 11 sectors were lower on the week.

While one week doesn't make a trend, it's worth noticing XLE is now the 2nd best performer over the trailing month, showing similar leadership as XOP is among industry groups.

Tech and Health Care continue to be resilient but the bond-proxy sectors lagged noticeably this week. We're watching this closely for risk-appetite as well as for a read on the Bond Market.