Dissecting The Sectors Sector Chemicals/Agriculture Bullish
Outlook: (CEX) remains in a long-term uptrend, climbing along support at its 10-month and 20-month moving averages. Meanwhile, the Market Vectors – Agribusiness (MOO) exchange-traded fund is also being buoyed by its rising 10-week and 20-week moving averages. Despite their continued uptrends, investor sentiment reveals skepticism. Pessimism among options players remains dominant as the chemical sector's composite Schaeffer's put/call open interest ratio (SOIR) comes in at 0.85. The latest reading ranks above 71% of all those taken during the past year. Furthermore, just 53% of the analysts following the sector rate it a "buy" or better, leaving room for future upgrades. Sector Coal Bullish
Outlook: Crude prices closed above the $105 per barrel last week, and the added pressure among energy stocks benefited coal companies, leading us to reiterate our bullish stance on the coal sector. Foundation Coal (FCL) and Arch Coal (ACI) have pulled back to support at its rising 10-week moving average. Meanwhile, Consol Energy (CNX) is rallying along support a its rising 10-week and 20-week moving averages. Pessimism, however, remains at a premium on the group. According to Zacks, 24 of the 40 analysts covering the trio rate them a "hold" or worse. Elsewhere, both CNX and FCL sport Schaeffer's put/call open interest ratios in the upper third of readings taken during the past year. An unwinding of this bearish sentiment could help propel the sector even higher in the coming weeks. Sector Large-Cap Technology Bearish
Outlook: The Select Sector SPDR Technology Fund (XLK) closed its third consecutive week below its 160-week moving average this week. This trendline had defined key support for this technology exchange-traded fund during the prior month, and an extended trip below this trendline could be a sign of a significant weakness for the sector. Helping to drive the XLK lower is poor performance from key members such as Microsoft (MSFT), which is off almost 22% year-to-date, Google (GOOG), down 37% year-to-date, and Apple (AAPL), down 38% year-to-date. Despite this technical weakness, we continue to see signs of optimism. Zacks data show that 49% of analysts offering up opinions on XLK components rate them a "buy" or better. This complacency doesn't bode well for large-cap technology stocks, and could indicate that the sector has more bullish sentiment to unwind in the form of selling pressure before it finally bottoms out.
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