Sector Investing

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11:00 ET Dow -83, Nasdaq -18, S&P -9.77: [BRIEFING.COM] Equity market continues to fall deeper into negative territory as sellers assume control over the morning's proceedings... Market internals reflect the bearish disposition of the action, with decliners outpacing advancers by more than a 2-to-1 margin at the Nasdaq and NYSE... The source of the market's malaise continues to be the weaker than expected Consumer Confidence index for July, which brought concerns about the beleaguered labor market back to the surface... Briefing.com would point out, however, that the Conference Board's reading generally reflects the prior month's conditions, and that weekly jobless claims have improved over the past two weeks... Specifically, initial claims have dropped by 55K, with the last reading of 386K ending a 22-week string of jobless claims above the critical 400K level... Nonetheless, the drop-off in Consumer Confidence has provided traders an ample opportunity to book profits, and they have made high-flying areas such as technology their main targets... NYSE Adv/Dec 927/2029... Nasdaq Adv/Dec 1023/1753.

10:30AM : Traders continue to unload positions following the sharp drop in the July Consumer Confidence report... The Conference Board's index slumped to its lowest reading in four months, at 76.6 (consensus of 85.0), as the expectations component fell (to 86.4) for the first time since the war in Iraq... The rise in the June unemployment rate to a nine-year high has renewed consumer concerns about the labor market, and business conditions as well...
Such a reaction, not surprisingly, has precipated a deep pullback in the indices given the market's mid-March run on expectations of a stronger 2H03 economic environment... Momentum groups like biotech and semiconductor have led the broad-based retreat, along with financial and retail... NYSE Adv/Dec 966/1858, Nasdaq Adv/Dec 1011/1622

9:16AM The Technical Take : More of the same for the major market averages as lower volume choppy trade continues to dominate. As the daily struggle between the bulls and bears (which has essentially been a draw for most of the last month or so) continues, we have been looking under the surface for signs/indications that one of these forces is beginning to assert control even if the indices themselves are little changed.

One way to gauge this is through the performance of the various sector indices. While we have seen some pressure develop in a few groups, it has thus far been mainly limited to the energy segment of the market (Oil -- XOI, Oil Service OSX, Natural Gas XNG). A more diverse group of sectors have recently been able to push to new recovery highs including: Cyclical (CYC), Defense (DFI), Healthcare (HMO), Health Provider (RXH), Chemical (CEX), Insurance (IUX). Most of the other sectors continue to hold at/near typical support barriers such as the 20/50 day moving averages or the lower end of recent ranges.

The sector evidence is far from conclusive and there remains technical concerns (low VIX readings, weaker seasonal period etc.) but at this point until we begin to see a broadening of the weakness beyond energy (groups edging through the support zones) it appears that the bulls still have the upper hand. From a market cap perspective, the best performing segment of the market since the March bottom has been the smaller caps as represented by the Russell 2000 which has even outperformed the tech/momentum dominated Nasdaq Comp.
To see the near term technical levels of interest go to The Technical Take Stock Brief.
Send suggestions, comments or questions to -- Jim Schroeder, Briefing.com

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