Relative Performance of S&P Sectors
- Posted by DynamicHedge
- on March 16th, 2012
The train keeps rolling. Currently, the market is working through the overhead supply at $SPX 1400. Once this is over the next likely point in the 1430-1450 area. Sorry bears.
If there is no pullback then we need to pay attention to sector rotation. Lets take a look at the performance of the S&P sectors and see which are overheated and which have room to run.
Performance is relative to the recent run and standard deviation is over 2-years.
Symbol vs SPY
Recent Market Performance
Standard Deviation (2-year)
|$XLF (Financials)||market performed||-1|
|$XLI (Industrials)||market performed||-1.91|
|$XLP (Cons. Staples)||underperformed||0|
|$XLV (Healthcare)||market performed||0.09|
|$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.
What sectors are you watching and what does this data tell you about the market?
Disclaimer: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please click here for a full disclaimer.
DynamicHedge is an equities, futures and derivatives trader based on the West Coast. He runs a long/short opportunistic relative-value strategy within a proprietary trading group. More
- Volatility expands at the end of a bull market
- Market maps and cycle changes
- Macro that matters
- Is your brain a fortress or a wild bus ride?
- Sector Momentum Visualized
- Simple rule to improve financial decisions
- Quick observations on the 200-day moving average
- Momentum Mechanism
- How does Apple trade after earnings?
- 70 days of suffering in WalMart