Basic materials: +27.6%
Conglomerates: +14.7%
Capital Goods: +11.6%
Energy: +9.1%
Technology: +8.6%
According to S&P, these are some of the smallest sectors for the S&P 500. So these sectors could rally while the overall index performs poorly.
Unfortunately, there isn't an ETF for conglomerates. But there are ETFs for the other market sectors. So let's take a look at the 1-year charts to see what they look like.
Basic Materials
This sector dipped below its 200 day SMA but has bounced back over the SMA this last week. Also note that prices are above the 10 and 20 SMA which will pull these SMAs higher. The 10 and 20 SMAs are turning higher right now, although we'll need further upward price action for this trend to continue. Finally, the index sold off to between the 50% and 61.8% Fibonacci level. Short version: this chart looks like a standard, garden-variety correction after a year-long rally.
Energy
The energy sector had a 4-month rally this year, but has sold-off with the rest of the market. Prices almost touched the 200 day SMA once, but have rebounded since then. The shortest SMAs are below the longer SMAs, but the index's price is now higher than the shorter SMAs which will pull those higher. Also note the index sold-off to about the 50% Fibonacci level. Like basic materials, this looks like a garden variety correction after a rally.
Industrials
Like the energy sector we had a 4-month rally in this sector this year. In addition, we've had a standard sell-off. Prices touched the 200 SMA for support but have rallied since touching that line. Prices are also moving up through the moving averages which will bring those higher. Finally, we had a sell-off to the 61.8% Fibonacci level, making this yet another garden-variety sell-off.
Technology
Technology sold-off with the market and touched both its 200 day SMA and the trend line it established in August of last year. Also not the index sold-off to the 50% Fibonacci level. Prices are higher than the shorter SMAs, which will bring those higher.
Is anyone seeing a pattern? All of these sectors have sold-off with the rest of the market. However, the sell-off was most likely profit taking rather than concern about subprime mortgage exposure.
That leads to a big reason why we could see these sectors rally again: they don't invest in mortgages. The global infrastructure story is still out there. All of these sectors have exposure to that story.
