The stock market may have given a history-making example of how much it dislikes uncertainty this past week. By the time stocks opened on Wednesday, it seemed as though the Republicans had held on to the Senate, but lost control of the House of Representatives. That information was enough for some investors and traders, triggering Wednesday’s rally.
The S&P futures opened almost 20 points higher, and the major averages also gapped higher on the open. The widely-watched Spyder Trust (SPY) closed Tuesday at $275.12. but opened Wednesday at $277.56. It finally closed the day at $281.01, up over 2% for the day. For the S&P 500, it was the ninth-largest gain ever.
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Most of the major averages closed the week well below the week’s highs, but many still had solid gains, with the Dow Industrials up 2.84%, followed by a 2.13% gain in the S&P 500. The market internals were strong Wednesday, but by the close on Friday, the small cap Russell 2000 was only up 0.1% for the week.
The major averages, especially the tech-heavy Nasdaq 100, started to weaken on Thursday and then closed down 1.7% on Friday. It was only up just over 1% for the week. On Wednesday’s rally, healthcare, consumer discretionary, and technology led the way. The weekly analysis of the key sectors still is giving a mixed picture.
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The week’s top performers, HealthCare Select (XLV), Reals Estate Sector (XLRE), Utilities Sector (XLU) and the Consumer Staples Sector (XLP) were all up over 3%, led by XLV. They all have positive weekly relative performance (RS) analysis, which is how I pick market-leading ETFs and stocks. It is based on a ratio of the ETF or stock price to the S&P 500. I look at it on a monthly, weekly, and daily basis. Those ETFs or stocks with the strongest RS analysis will generally outperform the S&P 500 when it is rising, and not fall as much when it is declining.
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