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Friday’s Sector Trends

April 28, 2016 •

Looking at sector trends at the end of a trading day on a Friday can help you to prepare for your coming week. Besides looking at the major winners and losers from the last day of the week, doing this shows you exactly what consumer sentiment is toward the sectors, and it helps you to have a point of comparison with any other data you can get your hands on over the weekend.

On Friday, February 26th, the market had some clearly distinct movement. The big winners were the energy and financials sector, moving up 0.89 and 0.46 percent, respectively. This is largely because of what’s going on with oil, and thanks to the fact that oil is apparently finding a new support point, and that that support line is a few dollars higher than it was a few weeks ago, the companies that are involved in energy, and those that finance them, are seeing some rising prices. If this trend in crude oil continues next week or begins to improve again, these companies are likely to see more gains. Traders taking out day long or even weeklong binary options should be paying attention to this so that they can establish a few longer term positions to gain some diversity and extra security in their trades.

The big loser for the day were utilities and non-cyclical consumer goods, dropping 2.05 and 1.22 percent, respectively. The utility sector makes a lot of sense, also because of crude oil. Utility companies are reliant on the price of oil, just like the energy sector, but they operate on a lag and the oscillating price of crude does not impact them as immediately as it does the energy sector. The good news is that the oil industry has shown signs of hitting a bottom, and that means that utilities should begin to recover soon. Whether or not this will happen in the next week or two is unclear, so there’s a good chance that this sector will be trading sideways for a bit. As a result of this, short term traders of all sorts are probably best to stay away from them.

That leaves noncyclical consumer goods. This sector fell the second most of any sector on Friday, but there’s no immediate cause why this happened. This includes companies like Coca Cola, Revlon, CVS, and Procter & Gamble. Because of poor earnings reports, consumer and trader uncertainty, and other factors, these companies saw an overall decline, but there are exceptions. Revlon’s stock went up by more than 3 percent. CVS dropped by about 0.75 percent. The biggest major loser of the day was Coca Cola, dropping by 2.31 percent. The good news is that a drop of this magnitude was probably not warranted, and that means that a quick recovery is the most likely outcome. Like utilities, there’s no clear timetable on when this will actually occur, but it should be sometime before the next earnings season.

This is all fundamental data, so it is best used for creating a long term trading plan, and should not be the sole influence for your short term trades. For this, you should use your knowledge of an individual asset, strong technical indicators, and anything else that you may have found to be helpful in determining your short term positions. Just know that most traders find that they have better statistical success when they are trading with the general trend, and looking at sector data can give you a quick snapshot of what exactly that general trend is before you get started. The deeper you dive here, the more you can see what and when you should be trading.

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