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Thursday
Jan242013

Sector Relative Strength: Only Three Sectors Leading the Market

The charts below show the relative strength of the ten S&P 500 sectors versus the S&P 500 over the last year.  When the line is rising it indicates that the sector is outperforming the S&P 500, while a falling line indicates underperformance.  We have also shaded each sector in red or green to indicate whether the sector has outperformed (green) or underperformed (red) the S&P 500 over the last year. 

Interestingly, as the S&P 500 rallies above 1500 for the first time since December 2007, only three sectors have outperformed the overall index in the last twelve months.  Financials are leading the market by the widest margin and have been steadily outperforming the S&P 500 since last summer.  Not far behind, the Consumer Discretionary sector has also been consistently outperforming the overall market since last Summer, and for that matter most of the entire bull market.  The only other sector that has outperformed the S&P 500 in the last year is Health Care.

While there are a total of seven sectors that have underperformed the S&P 500 over the last year, two of those sectors (Industrials and Materials) have made nice turnarounds in the last several weeks.  While these two sectors are on the verge of moving into the green relative to the S&P 500, Technology has been moving in the other direction, led by Apple (AAPL), which just can't find a bottom.  If the sector keeps up this pattern, it will not be long before it gives Energy and Utilities a run for their money in terms of the biggest loser.