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February 1, 2025

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The Best Five Sectors, #5

4 Mins Read

Technology Moves Back into Top-5

As we wrap up another trading week, a notable shift has occurred in the sector rankings.

The technology sector, after a brief hiatus, has clawed its way back into the top 5, pushing energy down to the 7th position. This reshuffle reflects the dynamic nature of market rotations and sets the stage for potential shifts in investment focus.

The New Sector Lineup

  1. (1) Consumer Discretionary – (XLY)
  2. (2) Financials – (XLF)
  3. (3) Communication Services – (XLC)
  4. (4) Industrials – (XLI)
  5. (6) Technology – (XLK)
  6. (7) Utilities – (XLU)
  7. (5) Energy – (XLE)
  8. (8) Materials – (XLB)
  9. (9) Real Estate – (XLRE)
  10. (10) Consumer Staples – (XLP)
  11. (11) Health Care – (XLV)

The top-4 and bottom-4 positions did not change. The weakness of the Energy sector has caused Technology to move up into the top-5 and Utilities to take the number 6 spot.

Weekly RRG

On the weekly Relative Rotation Graph (RRG), XLY maintains its position in the leading quadrant with the highest RS ratio, despite some loss in relative momentum.

  • XLC, at #3, has halted its momentum loss and shows a slight move to the right, picking up relative strength again.
  • XLF (#2) is rotating through the weakening quadrant but still has the potential to turn around.
  • XLI (#4) displays a weak tail, pushing into the lagging quadrant, but still outperforms others in that space.
  • XLK (#5) remains in the improving quadrant, heading towards leading, a promising trajectory.

Daily RRG

Shifting to the daily RRG, we see some variations that support longer-term trends:

  • XLY is rapidly moving back towards leading through the improving quadrant, reinforcing its weekly strength.
  • XLF is losing some relative momentum but remains within the leading quadrant.
  • XLC shows a strong trajectory back into leading, aligning with its weekly rotation.
  • XLI remains in leading but is shedding some relative momentum.
  • XLK, while in the lagging quadrant, is starting to curl upwards, bringing its daily tail in-line with the weekly rotation towards the leading quadrant.

Consumer Discretionary (XLY)

XLY is holding up remarkably well, establishing a new higher low of around $218 — a key support level.

Price action suggests a move toward the previous high of $240. Relative strength lines maintain a positive position, underscoring the sector’s dominance.

Financials (XLF)

The financials sector pushed to a new high this week, confirming its bullish condition.

A higher low is clearly in place, and the relative strength chart has bottomed out against former resistance. This setup suggests the RRG lines may turn up soon, imho.

Communication Services (XLC)

XLC is following through nicely after breaking out of a flag-like consolidation pattern.

The sector is now pushing to new highs, dragging relative strength and RRG lines higher and is maintaining a strong rhythm of higher highs and higher lows — a textbook uptrend.

Industrials (XLI)

While XLI remains within its rising channel and has moved away from support, its relative strength is less convincing — neutral at best. However, compared to other sectors, it’s in a relatively good position despite declining RRG lines.

Technology (XLK)

The “new kid on the block” in the top 5, XLK is still capped under the $240 resistance level within its rising channel. Its relative strength line is range-bound and moving towards the lower boundary. RRG lines are slowly picking up.

XLK’s position inside the top 5 seems more due to weakness in other sectors than its strength.

Portfolio Performance

The RRGV 1 portfolio ends the week with a 3.96% gain, outperforming the S&P 500’s 3.4% — an impressive 50 basis points of alpha. I’ll be updating the portfolio on Monday morning, switching out energy for technology based on opening prices.

Summary

While technology has reclaimed its top 5 spot, it’s crucial to recognize that this is partly due to weakness in other sectors rather than overwhelming tech strength. However, as the largest sector, XLK can significantly impact overall portfolio performance. Investors should watch for a potential breakout above $240, signaling further upside.

#StayAlert and have a great weekend. –Julius

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In World news

Six Americans freed in Venezuela after Trump envoy meets with Maduro

3 Mins Read

Six Americans who had been detained in Venezuela are heading home to the US, President Donald Trump announced Friday, after his envoy met with the country’s President Nicolás Maduro.

US officials have not yet given details of the six detainees released, but Trump’s envoy for special missions Richard Grenell posted a picture on X of himself with the men aboard a plane.

“I’ve just been informed that we are bringing six hostages home from Venezuela,” Trump wrote in a post on Truth Social. “Thank you to Ric Grenell and my entire staff. Great job!”

Grenell’s picture shows four of the released Americans wearing light blue outfits commonly worn by people held in the Venezuelan prison system.

“We are wheels up and headed home with these six American citizens. They just spoke to President Trump, and they couldn’t stop thanking him,” Grenell wrote in his post.

Maduro’s claim to a third term has been contested by the country’s opposition, which has published thousands of voting tallies that suggested their candidate, Edmundo Gonzalez, won the election in July last year. They were backed by independent observers such as the Carter Center and the Colombian Electoral Mission.

Like the European Union, the United Kingdom and Canada, the US does not recognize Maduro as Venezuela’s legitimate leader. It has placed a raft of sanctions or visa restrictions on Maduro-aligned officials. Washington has no diplomatic presence in Venezuela.

In September the US seized Maduro’s airplane.

Friday’s prisoner release came after a meeting between Grenell and Maduro, which had been expected to cover the deportation of Venezuelan nationals from the US. Trump has prioritized his campaign promise of mass deportations but Maduro has refused to take Venezuelan nationals back – and the US has generally been unable to send Venezuelans back because of frosty relations.

Gonzalez, who the US recognizes as Venezuela’s president-elect and who attended Trump’s inauguration, has warned the White House against cutting a deal with Maduro on deportation flights.

As Grenell headed to the meeting on Friday, Trump was asked if his envoy being photographed with Maduro would lend legitimacy to the Venezuelan leader.

The US President told reporters he wanted to “do something with Venezuela,” but noted that he was “a big opponent of Venezuela and Maduro.”

“They’ve treated us not so good, but they’ve treated, more importantly, the Venezuelan people, very badly,” he said.

Maduro said in an annual speech to the judiciary late on Friday evening that the meeting with Grenell had yielded some initial deals and he looked forward to “new deals for the good of the two countries and the region,” according to Reuters.

“President Donald Trump, we have made a first step, hopefully it can continue,” Maduro said.

Maduro and Grenell also discussed issues of migration and sanctions, according to a Venezuelan government statement on Friday.

Under Maduro – in office since 2013 – oil-rich Venezuela has fallen into a deep economic and political crisis, gripped by hyperinflation. Millions of people have fled the country in fear and desperation.

The State Department advises Americans against traveling to Venezuela, warning that “there is a high risk of wrongful detention of U.S. nationals.”

Nine Americans were brought home from Venezuela by the Biden administration in 2022 after five years of detention in the country.

In December 2023, the US secured the release of six wrongfully detained Americans and four other Americans held in Venezuela.

This post appeared first on cnn.com

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In Business

Starbucks announces several changes, including plans to cut some menu items

1 Min Read

Starbucks announced several changes, including its plan to cut some items from the food and drink menu.

‘We’ve taken steps to refocus the business, our mission and our marketing to better align with our identity as a coffee company,’ Starbucks chairman and CEO Brian Niccol said Tuesday. ‘We’re relying less on discounts to drive customer traffic and doing more to demonstrate our value.’

Niccol did not say which food and drink items would be leaving.

Among other changes, the coffeehouse chain is no longer charging extra for nondairy milk, will reintroduce the coffee condiment bar and will provide ceramic mugs to customers who dine in-store.

These changes are in an effort ‘to re-establish Starbucks as the community coffeehouse and improve the café experience,’ he said.

A Starbucks spokesperson said customers who want to enjoy their beverage at the establishment will receive the drink in a ceramic mug, glass or in their clean personal cup. They can also receive free refills of hot brewed or iced coffee, or hot or iced tea during their visit.

This post appeared first on NBC NEWS

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