Sector Rotation : Week 44/09

A reversal of fortunes in the top spot from last week had brought the market down. Materials (3.01%) had led the decliners followed by Health Care (-2.64%), Industrials (-2.54%), Energy (-2.44%), Utilities (-2.26%), Consumer Staples (-1.7%), Consumer Discretionary (-1.4%), Financials (-1.24%) and Technology (-0.09%).

Transportation might be in big trouble this coming week. Last week, it tumbled more than 5% due to concerns of the industry growth. A quick look at the Dow Jones Transportation Average Index daily chart reveals a double top pattern. The Dow transportation index broke above and closed below the 50 day moving average. Further weakness from Dow transports is likely to put further strain on the 3 main benchmarks.

Airlines were the weakest in the Transportation sector. The airlines industry is likely to suffer in the coming months especially if oil prices remain above the $80 level.

In conclusion, the market will be weak if the Transportation sector accelerates to the downside.