 Hello traders at CMC Markets, welcome to a new update by RRG Research for Monday, the 3rd of October and I am recording this on Friday, the 30th of September. My name is Julius de Campanar and I am presenting to you from Amsterdam in the Netherlands. There is a lot going on in the markets. All markets around the world have been dropping in price and for this video I want to focus on what's happening in US sectors because I think that they are painting a picture that is pretty representative of what's happening around the world. We're looking at the RRG for the 11 S&P sectors and for those of you who don't know the dots at the end represent the market capitalization for each sector. So the big dots are big sectors and the smaller dots are smaller sectors. You can see that utilities is a small sector, you can see that real estate is a small sector but here the big one that is technology of course but also consumer discretionary is a pretty big sector and so is healthcare. What can we learn from this RRG? Well first of all the stuff that's been bad for quite some time and still is and is getting worse is telecom, communication services, materials and real estate. Those are the 3 sectors inside the lagging quadrant and they are continuing to move lower on the RS ratio scale. Materials actually had a little bit of a hiccup but now it started to move to the left as well. If we look at financials they had a pretty good couple of weeks traveling through improving towards leading but as you can see this week the last segment on the tail here shows that it is not continuing its way and the velocity which is the distance between the nodes on the tail is really really short which indicates that the momentum, the power behind that move is slowing down. When we look at the tail for consumer discretionary this was the odd one out over the last couple of weeks because this is a very offensive sector so usually when the markets come down as they have been doing the last couple of weeks sector like consumer discretionary is usually underperforming and that did not happen so it was a bit of a weird constellation so to say but that now seems to get back in order as we see consumer discretionary rolling over and starting to lose relative momentum. Energy technology I think that is the most important sector to watch at the moment it's always an important sector because it's so big and it drives a large chunk of the S&P 500 which you can see here that over the last couple of weeks the tail rolled over it's still inside the leading quadrant but very close to crossing over to weakening and then very close to crossing into the lagging quadrant. It is travelling at a negative RRG heading and we don't really like that. What we do see travelling at a positive RRG heading are sectors like utilities, energy and consumer staples in healthcare are curling back up they are on their way to start moving higher and potentially not even hit that lagging quadrant. The important takeaway from this is that these are defensive sectors so it looks as if defense is back on the move again and is starting to pick up inside the S&P 500 while consumer discretionary and information technology and materials and to a lesser degree real estate are really the offensive sectors so defense is looking really good while offense is deteriorating and I think that you need to keep an eye on the information technology sector to keep an eye on the bigger picture. Let's take a look at the individual charts first the S&P 500. I think we are at a pretty crucial level for the S&P 500 itself. If you look at the previous lows in this case where support is coming from you see a cluster of lows here in January and that was tested again here in July and we broke that last week this is a weekly candle chart and then just a much lower there is a cluster of highs and lows here in November 2020 it is the extreme low in June and it is last week's extreme low and we are now pushing against that level that's in the 3645 area if you look at the channel that's forming here I think a break below 3645 will definitely accelerate cause an acceleration of the decline in the S&P 500 if we hold here then we are in for probably a pause in the trend maybe sideways maybe a little bit higher but you can see that the series of lower highs and lower lows is still in play and that's the downtrend that we're experiencing now and that has to change that rhythm of higher highs and lower lows sorry that rhythm of lower highs and lower lows need to be reversed into a rhythm of higher highs and higher lows before we can talk about a new uptrend again. Quickly three individual sectors here is information technology as I just told you that is the heaviest sector is the heavyweight in the S&P 500 it's rolling over on the RRG and as you can see it is resembling the levels of the S&P itself not very surprising given the given the market cap but for technology I think we need to watch 2140 if we if we close decisively below 2140 on a weekly scale that opens up a lot more downside possibility for the technology sector and where technology is going down it'll be very hard for the S&P 500 to go up and then two more defensive sectors here is the consumer staples as you can see even the defensive sectors are pushing against support levels that shows you how weak this market is at the moment the big difference between offensive and the defensive stuff is that the RS ratio is still above 100 and the RS momentum is starting to pull up so it's it's pulling that tail back towards the leading quadrant relative strength is picking up again for a sector like consumer staples and it is definitely doing that for utilities which as you could see on the RRG is the highest ranking sector in terms of RS ratio it's got the strongest relative trend and you can see that the price chart is not fantastic and bounced off that resistance near 390 it is actually coming down quite rapidly but the strength is in the relative the relative is way above 100 relative momentum is picking up this sector will soon be hitting the leading quadrant again and if defensive sectors are in the lead that's usually not a good sign for the S&P 500 that's it for this week and I'm looking forward to seeing you again next week a new episode for RRG research same time same place thank you for watching