Sector Trends

The top 5 sectors in terms of month growth are all dominated by interest rate sensitive groups.

1. Residential Construction
2. Trucking
3. Savings and loan
4. Regional mid atlantic banks
5. Home Improvement Stores

None of these groups have the earnings power to make big moves. When homebuilders were rallying in bear market, they had earnings power, almost all of them had high double digit or triple digit earnings growth or sales growth. Only Homebuilder with outstanding earnings currently is the Brazilian builder Gafisa (GFA). It is forming a nice base near its 52 week high. It is also a recent IPO. This is a stock to watch for possible entry on EP or high volume breakout.

If you look at the top 6 groups with largest number of stocks making new high, none of the groups from above list barring Savings and Loan is in the top 6 group in last one month. Savings and loan has made it to top 6 today. Out of the other groups dominating the list Medical group has the potential but most stocks in the group are not following through on breakout. Only exception so far has been Somanetics SMTS. It is a stock worth keeping an eye on.

If you see the sector trend on bearish side over the last one month in the Sector tracking spreadsheet on MM page, you would clearly see new sectors are joining the bearish party with Technology as dominant group of sectors now leading the downside.
The bottom 5 sectors in terms of month growth are dominated by technology.

1. Personal computer -26
2. Heavy Construction -24
3. Internet Information Providers -18
4. Technical System and Software -18
5. Multimedia and Graphics Software -16