Relative Strength of Energy and Transports vs S&P 500
Friday, February 25, 2011 at 12:09PM Each week in our Sector Snapshots report (which is available to all Premium subscribers), we highlight the relative strength of individual sectors versus the S&P 500. In this week's report, we saw the relative strength of Energy soar, while nearly every other sector saw a decline in its performance relative to the S&P 500.
One area of the market that has been especially hard hit is the Transportation sector (which is now actually classified as part of the Industrials sector). In the chart below, we have compared the relative strength of both sectors relative to the S&P 500 (Transportation in red and Energy in blue). Not surprisingly, there is a strong inverse correlation between the two. While Transportation stocks outperformed the S&P 500 up until late last summer, their relative outperformance stalled just as the Energy sector was breaking out of its funk. Transportation really started to roll over when Energy started to pick up steam near the end of 2010.
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