Since over half of a stock's performance is due to its sector, it is important to have a method to evaluate broad sector and industry trends. As readers of my previous posts may guess, I am quite partial to IBD's industry ranking feature which ranks 197 industry sub-groups according to six month price performance. This level of detail is hard to emulate easily at home, but even simpler systems can give you insight into the market and help you make better informed trades. One easy way to gauge broad sector trends is to track sector ETFs versus a broad market index.
XLE
Energy Select Sector SPDR ETF
Last review we noted that the focus of this past week would be looking for the Dow and S&P to break above 200DMA resistance as the NASDAQ and NYSE Composites had. Instead, these indices found significant resistance there and fell below key levels--the Dow even falling below and finding some resistance at its 50DMA.
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