Sector Spotlight: Opportunities Emerge For Investors In These Sectors

Market Recap For July 1st, 2022

Even though the day-to-day was rocky last week, the overarching current was expected to be higher. Friday’s rally seems to keep that forecast intact.

Unless the S&P completely reverses today, new recovery highs should be expected, at some point. However, that would still be within a larger bear market view.

Yesterday’s Sector Performance

Utilities led the market on Friday, which was the 3rd day in a row.

Technology was the weakest sector.

Five-Day Sector Performance

To no real surprise, Utilities ended up winning the week.

Discretionary, Services and Tech all finished the week clustered at the bottom.

ETF TradeWatch

Utilities Select Sector SPDR (XLU)

Utilities have been on a quite the run, but may be getting a bit stretched at these levels. Either way, traders may want to watch the XLU for potential trading opportunities. Looking at the chart, we can see prices are making lower highs on the bounce and lower lows when traders determine the price is too high for them to keep buying. It is still early, however, if this pattern persists then more investors may start seeing this clear downtrending channel form.

Energy Select Sector SPDR (XLE)

Oil rallied a bit on Friday, as did most Energy stocks that are tied closely to the price of oil. The XLE would likely benefit from a further market and oil rally, but support is looming just below. Traders may want to keep a close eye on support in case the price bounces again, which it had done a few times throughout the year. A break of this support level could mean a steep decline is still in store, bad news for someone like Warren Buffett and his Occidental Petroleum (OXY) investment.

Both situations present traders with opportunity to try for a bounce or watch for a break of support levels to trade puts.