The tech has been one of the leaders throughout this rally. The XLK has been trending higher and the 50 SMA has crossed over the 200 SMA. As the second quarter coming to an end, lot of those skeptical fund managers that have been underweight in tech will dress up their portfolio with tech stocks before the end of the quarter. This window dressing will boost the tech ETF, XLK higher.
The financial has been strong until its recent consolidation. Similar to the tech sector, lot of people were skeptical about the financial sector. For those skeptics that have missed this rally, they are feeling they must move in during this consolidation to make up for their miss. Also, for those fund managers that have been invested in financial, they will increase their position on financial to dress up their portfolio with recent strong performers. After the XLF consolidated near the 200 SMA, the end of the quarter window dressing will move it above the 200 SMA and continue its upward trend toward the Nov 2008 high level.
With crude oil going from the $30's to over $70 a barrel, the energy sector has benefited from the crude oil rally. Looking at the energy ETF, XLE, it appears there remains some additional upside. Although the crude oil rally might be near the end, but the momentum on the energy stocks will continue for a bit longer due to window dressing and the anticipated pick up in demands due to the summer months.
Until recent increases in the long bond yields and the mortgage rates, the consumer sectors were performing quite nicely in anticipating the recovery is just around the corner. As this bear market rally make its final move, the momentum should carry over to these consumer sectors for some additional upside. The strength of this upside will depends on the perceived action or inaction on the interest rate by the Fed to combat the rising bond yield.
Momentum for the materials ETF, XLB might be slowing a bit, but the uptrend remains intact.
The industrial sector is similar to the consumer sectors. It is consolidating above the 200 SMA for support. Until signs of technical deterioration, uptrend remains intact to break above the Jan 2009 high.
Finally, the health care sector is gaining strengths as money rotate into this sector.
