Sector Relative Strength

Following up on our earlier post concerning where sectors currently stand with respect to their 50-day moving averages (DMA), below we look at the relative strength of sectors versus the S&P 500.  Also, because so many investors follow the Transports as a leading indicator of the overall market, we have included the relative strength of this group as well.  This helps to highlight sectors that are outperforming and underperforming the S&P 500.  For each chart below, a rising line indicates that the sector is outperforming the S&P 500, while a falling line indicates underperformance.  Finally, in each chart a green background indicates that the sector has outperformed the S&P 500 over the last twelve months, while a red background indicates that the sector has underperformed.

As shown in the charts, even though the S&P 500 is essentially flat over the last year, more sectors have outperformed (6) the S&P 500 than underperformed (4).  Looking at recent movements in relative strength among sectors shows that sectors like Consumer Staples, Energy, Health Care, and to a lesser degree, Financials have all seen improvement in their performance versus the market.

On the other end of the spectrum, Consumer Discretionary, a long-time leading sector, has seen its relative strength start to trend lower.  The sector is still outperforming the S&P 500 over the last 12 months, but not as much as it did just two months ago.  Technology is another sector that has outperformed the S&P 500 over the last twelve months, but its relative strength has also slowed in recent months, peaking before the Consumer Discretionary sector.  Finally, the Industrials sector has been trailing the S&P 500 over the last year, and in recent weeks things have only gotten worse for the sector as its relative strength has made a new leg lower.

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