SP500 Sectors – Weekly Overview
The February monthly close delivered a critical set of signals across the eight major S&P 500 sectors. In today’s analysis, we explore the follow-up signals and their potential impact.
In this sector breakdown, we examine the latest candlestick formations, moving average shifts, momentum signals, and structural patterns to determine whether March marks the start of a broader correction—or simply a fast reset before the next move higher.
Sectors
Monthly
Weekly
Only four sectors closed February with bearish signals—Technology, Consumer Discretionary, and Communication Services, which together constitute over 60% of the market. Now the bearish stance has spread to additional sectors. After the first week of March, the sector dynamics are far from encouraging. Industrials, Staples, and Healthcare joined the leaders with strong bearish reversal candles and losses of major supports. Finance, Technology, and Discretionary moved one step closer to the cliff as the 8/20 EMA lines flipped into a bearish cross.
Energy remains the lone bullish voice, albeit barely.
With such a disposition, the market is bearish until we hear otherwise.
Finance Sector
Financials remain the most bearish sector, and the latest signals point to further downside. While it is still early to discuss the quarterly close in March, the chart currently tracks toward a strong bearish reversal on that frame.
As discussed earlier, statistical analysis of monthly MACD bearish crosses suggests an average decline of approximately 37% following similar events, with the smallest historical drawdown around 12%. So far, XLF has declined about 11% from the top, and the current signals indicate a high probability of continued downside.
The chart interprets the ongoing move as either wave 4 in green or wave (4) of a higher degree in blue—both scenarios previously discussed and still technically viable. The typical wave 4 range implies a 13–25% drawdown from the top. The $41.70 level serves as the key watershed between the green and blue counts.
Technology Sector – XLK
The Technology sector is holding the 200 DMA, but the larger frames continue to lean increasingly bearish. Statistical analysis suggests a higher probability of continued downside, potentially a 9–15% decline from current levels, or more than 20% off the all-time high.
Overall, XLK remains moderately bearish until technical signals indicate otherwise.
Elliott Wave
The charts below include the prior assessment and the updated outlook. Notably, the projected correction zone has been materially expanded to incorporate the possibility of a 20–30% decline. This adjustment reflects recently recorded long-term signals and historical precedent.
Overall, the market is almost entirely bearish based on sector dynamics. Even if Energy remains bullish, it has virtually no chance of saving the broader market from a continued decline.
SUMMARY
Sector dynamics deteriorated significantly after the first week of March. Weakness that initially appeared in a few sectors has now spread across most of the market. Technology, Consumer Discretionary, Communication Services, and Financials—the sectors that dominate the S&P 500—remain under the strongest pressure, while Industrials, Staples, and Healthcare have also joined the bearish camp after losing key supports.
Energy remains the only sector with a marginally bullish stance, but its weight is far too small to offset the broader weakness. With most sectors now leaning bearish, the overall sector structure suggests the market remains vulnerable to further downside unless a clear reversal signal appears.
