Saturday, August 21, 2010

Sector analysis

I thought it would be worthwhile to have a look at the individual sectors to get an idea of the extent of the damage done in the past few days and also to try and figure where the market is headed in the near future. Also, it is prudent to go with the strongest sector in case one wants to go long and similarly, short the weakest sector if one wants to go short. So, here are the charts of the major sectors. I have commented on the charts itself.

To just highlight the main points.

(1) Most of the sectors are struggling with the MA(50). 

(2) However, there is positive MACD divergence developing in few sectors, and add to that the doji formed in few of the sectors on Friday, a short term bounce looks likely but I expect this bounce to provide us with a good shorting opportunity.

(3) Best looking sectors - Utilities, Consumer Staples, Materials

(4) Worst looking sectors - Energy, Financials

Well, that's it for the sector analysis. I will be back with an analysis of the major indices trying to see where we are headed next week and also a watchlist of both long and short stocks.

Make it a great weekend!

P.S.: Which are the best and the worst performing industry groups (not sectors) out there? No prizes for guessing which one is the worst!

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