Relative Performance of S&P Sectors

The train keeps rolling.  Currently, the market is working through the overhead supply at $SPX 1400.  Once this is over the next likely point in the 1430-1450 area.  Sorry bears.

If there is no pullback then we need to pay attention to sector rotation.  Lets take a look at the performance of the S&P sectors and see which are overheated and which have room to run.

Performance is relative to the recent run and standard deviation is over 2-years.

Symbol vs SPY

Recent Market Performance

Standard Deviation (2-year)

 $XLB (Materials)  underperformed  -3.2
 $XLE (Energy)  underperformed  -3.79
 $XLF (Financials)  market performed  -1
 $XLI (Industrials)  market performed  -1.91
 $XLK (Technology)  outperformed  2.4
 $XLP (Cons. Staples)  underperformed  0
 $XLU (Utilities)  underperformed  -0.66
 $XLV (Healthcare)  market performed  0.09
 $XLY (Cons, Discretionary)  outperformed  -0.72


Below are the ratio charts since July 2011.  Market leaders like technology and consumer discretionary are not likely to soften in the near term.  Tech will likely continue to lead the market regardless of being overbought.  Consumer discretionary still has lots of room to the upside given that it is still almost 1 standard deviation below its mean — I mistakenly identified the surge in retailers as a warning signal last week.  I’m watching financials, industrials, and to a lesser degree healthcare to be the next sectors for money to rotate into should the market continue higher.

Materials and energy are lagging on a relative basis and are likely to continue that trend near-term.  Don’t get suckered into buying the worst performers unless you’re looking at the longest possible time horizon.  Consumer staples and utilities will only catch a bid if something in the economy catches fire.

$XLB vs $SPY:

$XLE vs $SPY:

$XLF vs $SPY:

$XLI vs $SPY:

$XLK vs $SPY:

$XLP vs $SPY:

$XLU vs $SPY:

$XLV vs $SPY:

$XLY vs $SPY:

What sectors are you watching and what does this data tell you about the market?


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