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Sector Spotlight: Keep A Close Eye On These 2 Groups

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June 29th, 2022

Going into Wednesday’s session, markets had already approached key supports, and those supports ended up holding. As Q2 draws to a close, investors will shift their attention to GDP numbers, which will indicate if the U.S. has officially entered a recession.

As long as these supports hold, higher prices could be expected at least in the short term. However, a break of levels, such as the S&P’s 3800, will likely mean a little tumble for the market.

Yesterday’s Sector Performance

Healthcare regained its spot at the top of the market. With rising concerns over the Monkeypox breakout, vaccines are still a hot commodity, especially in the wake of the COVID-19 pandemic. Investors have found some safety this year by buying shares of Healthcare ETFs like XLV, which is down only 9% compared to the market’s decline of around 15%-20%.

As quickly as Energy jumped to the top of the sectors, it fell right back to the bottom. Prices of oil jumped to some of the highest levels seen in years, rising over $120 per barrel, only to fall to where it currently sits just over $107 per barrel. The conflict in Ukraine is squeezing what was already a tightening supply, causing these prices to remain elevated all over the world.

Five-Day Sector Performance

Utilities are still leading the weekly performance chart as names like Duke Energy and the Southern Co. lead the way for the sector, up over 2.8% each. Utility stocks are often looked to as a hedge against a market downturn as utilities must be paid, regardless of the economic landscape. Investors find comfort that this sector’s stock prices and dividend payments should be largely unharmed when compared to other sectors.

Energy still sits at the bottom, but barely. This underperformance for the week has come as oil prices have cooled off quite a bit from their March highs of over $123 a barrel. Oil stocks have enjoyed a nice boost from these price increases, but have also stalled out as prices have been largely range-bound for the past two weeks or so.

ETF Trade Watch

Energy Select Sector SPDR (XLE)

Yesterday’s bounce in oil lasted into mid-day, but a reversal took hold quickly, and now it looks like XLE may pay the price. This has been the case for much of the past two weeks in the Energy sector. Prices have been largely range bound with spikes in price followed closely by selloffs. This whipsaw effect has investors on edge, especially in light of the ongoing situation in Ukraine.

Healthcare Select Sector SPDR (XLV)

XLV pulled back for a day or two, but Wednesday brought a turnaround that may have legs. Today will need to see some follow through first. With the number of Monkeypox cases on the rise, the Healthcare sector has received a boost. In the wake of the COVID-19 pandemic, investors have placed renewed faith in vaccine makers, and the introduction of this latest virus could spark a run on vaccine makers yet again.

Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group. My Chartered Market Technician (CMT) designation substantiates me as an expert in areas such as the technical analysis of stock trends, market indicators, cycles, price patterns, Elliot Wave principles, Candlestick charting, analyzing financial trends and behaviors, portfolio strategies, and forecasting future price movements. With my straightforward approach to simple, systematic trading, students learn how to strategically assess buy signals and market entry timing, establishment and management of stop losses, and how to employ a simple and disciplined trading approach that creates profits.

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