SP500 Sectors – Weekly Technical Analysis

Sectors

Weekly

A quick look at the weekly closures across major sectors suggests that the market is close to falling apart. If the situation does not improve in the next two days, although the probability is quite low, the monthly close will be decisively bearish for almost all sectors.

The exceptions are Staples and Energy. Staples formed a fairly strong bullish Harami Cross on the weekly, with solid chances of reversal. This potential move could help lift the monthly close from the bear claws. Energy is tracking bullish for the month and likely for the quarter.

Finance, Healthcare, and Discretionary have lost the 100-week MA support. Technology and Communication Services have lost the 50-week MA. Industrials are also bearish, although lagging slightly behind.

This type of capital rotation is typical for bear markets. As risk assets weaken, capital shifts into defensive sectors like Staples, which offer stability and consistent demand, and into Energy, which often benefits from supply-side pressures and inflationary trends. Similar dynamics were observed during the 2000–2002 and 2008 bear markets, where Staples held relatively strong and Energy outperformed at various stages of the decline.

Discretionary and Healthcare have now joined Finance as the most bearish sectors. Technology and Communication Services closely follow. While Staples and Energy have solid chances to deviate upward and temporarily support the broader market, they are unlikely to offset the overall bearish pressure.

The monthly and quarterly setups are threatening to close increasingly bearish across nearly all sectors, and a substantial bullish push would be required even to stabilize the current outlook—let alone reverse it. Under these conditions, the broader market remains bearish until proven otherwise.

Finance Sector

Financials remain the weakest sector, with a decisive breakdown below the 100-week MA support. The large 100/200 DMA bearish “death” cross is likely to be recorded before month-end. Unless the sector stages a meaningful recovery in the final two days of March, there is a real risk of printing a monthly Three Black Crows, reinforced by a Bearish Engulfing on the quarterly frame—a highly destructive combination from a technical standpoint.

As discussed earlier, historical analysis of monthly MACD bearish crosses suggests an average decline of approximately 37%, with the shallowest drawdown near 12%. XLF has already declined over 15% from the top and shows no signal of reversal.

From an Elliott Wave perspective, the current move is best interpreted as either wave 4 (green) or wave (4) of a higher degree (blue), both still viable. The typical wave 4 range implies a 13–25% decline, indicating that Financials have only just entered the expected zone. The $41.70 level remains the key watershed between the two scenarios.

Technology Sector – XLK

The Technology sector has lost the 50 WMA support for the first time since March 2025. This is a significant event, and price action is likely to continue in the same direction.

If this dynamic persists, the monthly could close below the 8 EMA for the first time since March 2025, while the quarterly is on track to form a very strong Bearish Engulfing—an outcome that would strongly favor lower prices in Q2.

Statistical analysis points to a higher probability of continued downside, potentially exceeding 20% from the all-time high. Overall, XLK remains bearish until technical signals indicate otherwise.

Elliott Wave

The charts below include the prior assessment, which remains intact. The projected correction zone continues to define the target area for a 20–30% decline, reflecting recently recorded long-term signals and historical precedent.

A push slightly lower would place the price within the target zone for wave 2 in blue, increasing the odds of a larger-than-initially-expected decline and reducing the odds of the red scenario.

Sector Weights

The updated sector distribution highlights rising concentration risk. Technology and Communication Services now account for nearly half of the index, while Financials continue to lose weight, confirming weakening participation from key economic sectors. Energy and Staples remain too small to support the broader market.

The weekly closures of the Magnificent Seven and Berkshire Hathaway are strongly bearish. This leaves the market increasingly dependent on a narrow group that is no longer showing momentum, making the overall structure more vulnerable to downside.

Overall, sector dynamics point to a broadly bearish market.

SUMMARY

Following last week’s note on deepening sector weakness, the structure has continued to deteriorate, but with clearer differentiation across sectors.

Financials remain the weakest, extending the breakdown below key supports and increasing the risk of a decisively bearish monthly and quarterly close. Technology continues to pressure lower after losing major levels, maintaining strong bearish momentum and weighing heavily on the broader market.

At the same time, Discretionary and Healthcare have now joined Financials among the most bearish sectors, while Communication Services closely follows. Industrials remain bearish but are still lagging slightly behind in terms of momentum.

In contrast, Staples and Energy continue to stand out as relative outliers. Staples show signs of a potential reversal, while Energy remains on track for a bullish monthly and likely quarterly close. However, their weight is insufficient to offset the broader weakness.

Overall, sector dynamics remain clearly bearish, with downside pressure dominating across most of the market and only limited, isolated resilience.