(By Rich Bieglmieir) Once again, Euro fears are making the rounds and pushing stocks into the red. As we mentioned in Tuesday, July 24th's i On the Market, no technical damage has been done, yet.
The indexes remain firmly within the boundaries of their current upward trading channels. The biggest concern is that the Dow and S&P kissed their respective July highs, but moved no higher before taking losses. The NASDAQ, meanwhile, finished its current run a few rungs short of the top of the ladder. That's not good, but can be overcome.
Surprisingly, as iStock journeyed through more than 150 sector and industry charts, the recent selloff put most sectors into holding patterns. As you will see in a few moments, our interpretation found very few industries with definitive direction.
Understanding the direction of the overall group, as it relates to the S&P, can help investors avoid putting dollars in dead zones of underperformance. For that, just hook up with an index fund.
Furthermore, monitoring sector performance gives the astute market watcher a sense of Wall Street is thinking. For example, this week we find that roughly half of the bear candidates are consumer related. Reading between the lines, the Street could be thinking that the average Joe and Jane's budgets are stretched, and spending will be limited to necessities for the time being.
iStock would suggest adding new positions for the bull columns, closely monitoring equities in the bear camps, and holding everything else unmentioned. Later today, we will highlight a buy candidate from either bull list.
EMERGING BULL: Industries with positive technical analysis traits that are in the early stages, indicating possible above average returns in the near-term:
MATURE BULL: Industries that have outperformed and their charts suggest the above average returns could continue:
MATURE BEAR: Industries that have underperformed and, based on their current chart patterns, could continue to lag:
Food Retail & Wholesale
Restaurants & Bars
EMERGING BEAR: Industries that have fresh negative technical analysis set ups and could have subpar performance in the weeks ahead:
Travel & Leisure
Property & Casualty Insurance