SMALLCAP SECTOR PERFORMANCE SHARPCHART, ENERGY-MATERIALS HIT NEW RELATIVE LOWS, INDUSTRIALS-TECH SHOW CHART STRENGTH, LEADERS IN CONSUMER DISCRETIONARY, DRI AND FRGI POP, NEW HIGH PARADE --

HEALTHCARE AND CONSUMER DISCRETIONARY LEAD SMALL-CAPS ... Link for today's video. Small-caps led the market higher this week as the Russell 2000 and S&P Small-Cap 600 hit new highs. As with the S&P 500, the S&P Small-Cap 600 can be divided into nine sectors and there are ETFs for these sectors. Chart 1 shows the S&P SmallCap iShares (IJR) and nine small-cap sector ETFs from PowerShares on a performance SharpChart. Simply enter multiple symbols in the symbol entry box to create this performance SharpChart. Note that free users can only enter up to five symbols. This chart shows the six-month percentage change for these nine sectors.

Over the last six months, the SmallCap HealthCare ETF (PSCH) is the clear leader because it sports the biggest gain. Note that the SmallCap Consumer Discretionary ETF (PSCD), SmallCap Technology ETF (PSCT) and SmallCap Utilities ETF (PSCU) are also leading and up over 13% since late September. The SmallCap Materials ETF (PSCM) and SmallCap Energy ETF (PSCE) are the clear laggards and in negative territory. Even though both have stabilized since mid December, they show no signs of buying pressure.

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Chart 1

Despite lots of lines on this chart, there is valuable information here and we can even spot performance breakouts. Notice how sector performance was all lumped together in December (just before the black arrow). Utilities were up big, materials and energy were down big, and the other six were lumped together. Two ETFs broke out of this pack in January: the SmallCap Consumer Discretionary ETF (PSCD) (red) and the SmallCap HealthCare ETF (purple). The performance breakout also coincided with new highs on the price charts. These two were the two strongest small-cap sectors by mid February and this strength continued into mid March.

ENERGY AND MATERIALS HIT NEW RELATIVE LOWS... Chartists can also turn the above performance SharpChart into a "relative performance" SharpChart with two clicks. Check the box in the upper left to "use first symbol as baseline" and then click update to create a relative performance chart. I am using the S&P SmallCap iShares (IJR) as the benchmark or baseline security. Sectors up more than IJR are outperforming and showing relative strength (relative to the benchmark). Sectors up less than IJR (or down) show relative weakness.

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Chart 2

Healthcare, consumer discretionary and tech show the most relative strength. Consumer staples, materials and energy show the most relative weakness. Notice how the relative performance lines for the SmallCap Materials ETF (PSCM) and SmallCap Energy ETF (PSCE) are in persistent downtrends. Even when these ETFs stabilized on the prior performance SharpChart, relative weakness continued on the relative performance SharpChart because they did not keep pace with IJR. New lows in relative performance reinforce the bearish outlook for these two sectors.

INDUSTRIALS AND TECH ETFS SHOW CHART STRENGTH... The next four charts show the "chart" leaders for the small-caps sector ETFs. I am calling them the "chart" leaders because these four hit new highs this week. Chart 3 shows the SmallCap HealthCare ETF (PSCH) breaking out in October and a gaining over 10% this year alone. The only negative on this chart is the overbought nature of this advance. The green lines show a rising channel and the ETF is near the upper trend line. This is not a "hard" resistance level, but confirms the extended nature of the advance. The lower trend line and March low mark support in the 64-65 area.

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Chart 3

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Chart 4

Chart 4 shows the SmallCap Consumer Discretionary ETF (PSCD) with a lift-off surge in October-November and a rising channel from December to March. The ETF hit new highs in January, February and March, and remains in a clear uptrend. It is hard to argue with new highs in the most economically sensitive sector. The channel trend line and a buffer mark key support in the 51-52 area. Chart 5 shows the SmallCap Technology ETF (PSCT) hitting new highs and in a strong uptrend. Chart 6 shows the SmallCap Industrials ETF (PSCI) hitting new highs in late February and March.

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Chart 5

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Chart 6

LEADING GROUPS IN CONSUMER DISCRETIONARY... In my webinars on Tuesdays, I often spotlight several individual stock charts with interesting setups. The vast majority of these setups are bullish right now because the stock market is trending higher. Someone asked how I go about finding these stocks and I will share one simple method to break the market down. By most measures the consumer discretionary sector is one of the strongest sectors in the stock market right now. In fact, the table below from the Sector Summary shows the Consumer Discretionary SPDR (XLY) as the second strongest sector over the past month. Of the nine sector SPDRs, only three are up over the past month and these three are the leaders (XLF, XLY and XLV). This picture probable looks a little different (stronger) if measuring the equal-weight sector ETFs and the small-cap sector ETFs.

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Chart 7

Chartists can breakdown the consumer discretionary sector by looking at the individual industry groups, which can be found in the Sector Summary. The table below shows one month performance for these industry groups and the table is sorted by percentage change to put the leaders at the top. I then look for stocks in these industry groups that have bullish setups. Note that you can see a list of these stocks by clicking the name of the industry group.

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Chart 8

DARDEN AND FIESTA POP... Chart 9 shows Darden Restaurants (DRI), which reported earnings today, surging to a new high with a 3+ percent move. The stock may be getting extended as it hits the upper trend line of a rising channel, but is by no means weak. The indicator window shows the industry group in an uptrend as well. Note that SharpCharts users can add the corresponding sector and industry group by using the symbols $SECTOR and $INDUSTRY as price indicators.

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Chart 9

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Chart 10

Chart 10 shows Fiesta Restaurant Group (FRGI) in a clear and steady uptrend over the last eight months. This uptrend is littered with small consolidations and continuation breakouts. This is one of my preferred ways to participate in an uptrend: wait for a pullback or consolidation and get in on the breakout. The stock consolidated in March and broke above last week's high with a move on Friday. Full-belly disclosure: I have eaten at Taco Cabana many times.

SIGNIFICANT HIGHS AND LOWS... There were dozens of new highs this week and I am singling out two dozen. Of note, several small-cap and mid-cap ETFs hit new highs. We are also seeing strength in healthcare, technology, retail and biotechs. I will highlight the charts for IJR, RYF, CARZ, XRT and XBI in Link for today's video.. Commodity-related symbols continue to dominate the new low list with metals, oil and lumber.

New 52-week Highs:

S&P SmallCap iShares (IJR)
Russell 2000 iShares (IWM)
S&P MidCap SPDR (MDY)
Russell MicroCap iShares (IWC)
HealthCare SPDR (XLV)
Equal-weight Finance ETF (RYF)
Equal-weight Healthcare ETF (RYH)
SmallCap HealthCare ETF (PSCH)
SmallCap Consumer Discretionary ETF (PSCD)
SmallCap Industrials ETF (PSCI)
SmallCap Technology ETF (PSCT)
SmallCap Financials ETF (PSCF)
Global Auto ETF (CARZ)
Leisure and Entertainment ETF (PEJ)
Media ETF (PBS)
MarketVectors Retail ETF (RTH)
Retail SPDR (XRT)
Insurance SPDR (KIE)
Biotech iShares (IBB)
Biotech SPDR (XBI)
HealthCare Providers ETF (IHF)
Medical Devices ETF (IHI)
Food & Beverage Portfolio (PBJ)
US IPO Index Fund (IPX)
Aerospace & Defense ETF (ITA)

New 52-week Lows:

Metals & Mining SPDR (XME)
Steel ETF (SLX) Oil & Gas Equip & Services SPDR (XES)
Commodity Tracking ETF (DBC)
Nickel ETN (JJN)
Spot Lumber ($LUMBER)
Spot Crude ($WTIC)
Spot Platinum ($PLAT)
Spot Sugar ($SUGAR)

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Thanks for tuning in and have a great weekend!
Arthur Hill CMT