$SPY Rebounds, but Sector Rotation Signals a Cautious Market
The market has now posted five consecutive intraday green closes following last week's sharp selloff. But the rebound is running into resistance.
Attempts to reclaim the declining 20-day moving average over the past two sessions have repeatedly failed.
The 10-day and 20-day moving averages remain in a death cross, and $SPDR S&P 500 ETF Trust(SPY)$ has printed its first lower low in five sessions.
Last Thursday's 4.4% intraday decline — equivalent to roughly 4x ADR — may have marked the monthly low. However, the odds increasingly favor a near-term pullback or consolidation rather than another immediate leg higher.
Ideally, SPY holds its reclaimed 10-day moving average during any short-term weakness. That would provide a clearer signal that relative strength is improving across sectors and industry groups.
🔍 Sector leadership remains underwhelming.
The top five sectors by relative strength as of the latest close are:
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$Consumer Staples Select Sector SPDR Fund(XLP)$ – Consumer Staples
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$Consumer Discretionary Select Sector SPDR Fund(XLY)$ – Consumer Discretionary
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$Utilities Select Sector SPDR Fund(XLU)$ – Utilities
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$Financial Select Sector SPDR Fund(XLF)$ – Financials
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$Health Care Select Sector SPDR Fund(XLV)$ – Healthcare
I'm not particularly excited about this leadership mix. The broader market still needs to demonstrate stronger participation from leading sectors.
📈 Top 20 Industry Groups by 1-Month Relative Strength
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$iShares Global Infrastructure ETF(IGF)$ – Global Infrastructure Assets
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$iShares U.S. Broker-Dealers & Securities Exchanges ETF(IAI)$ – Broker-Dealers
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$VanEck Pharmaceutical ETF(PPH)$ – Large-Cap Pharmaceuticals
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$SPDR S&P Insurance ETF(KIE)$ – Insurance
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$Spdr S&P Pharmaceuticals Etf(XPH)$ – Equal-Weight Pharmaceuticals
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$United States Natural Gas Fund LP(UNG)$ – Natural Gas
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$iShares U.S. Transportation ETF(IYT)$ – Transportation
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$iShares U.S. Aerospace & Defense ETF(ITA)$ – Aerospace & Defense
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$SPDR S&P Aerospace & Defense ETF(XAR)$ – Equal-Weight Aerospace & Defense
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$SPDR S&P Transportation ETF(XTN)$ – Trucking
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$Schwab U.S. REIT ETF(SCHH)$ – U.S. REITs
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$SPDR S&P Capital Markets ETF(KCE)$ – Capital Markets & Financial Services
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$U.S. Global Jets ETF(JETS)$ – Airlines
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$SPDR S&P Health Care Services ETF(XHS)$ – Healthcare Facilities & Services
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$iShares U.S. Medical Devices ETF(IHI)$ – Medical Devices & Surgical Equipment
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$iShares U.S. Telecommunications ETF(IYZ)$ – Telecommunications Services
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$Procure Space ETF(UFO)$ – Space Industry
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$SPDR S&P Retail ETF(XRT)$ – Retail
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$KraneShares MSCI All China Health Care Index ETF(KURE)$ – China Healthcare
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$iShares U.S. Home Construction ETF(ITB)$ – Homebuilders
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