Below we have updated our charts of sector relative strength. In each chart, rising lines indicate periods where the sector is outperforming the S&P 500. Charts with red shading indicate that the sector has underperformed over the last year. Additionally, in each chart we have also included red dots that highlight each of the Fed rate cuts since August.
After the strong gains in commodities over the last week, it probably comes as little surprise that the Energy and Materials sectors have sharply outperformed. In the short term, though, both sectors are trading at the upper end of their ranges, making longs more risky.
Strong earnings reports from INTC and IBM have helped to boost the technology sector as it tries to break the downtrend that has been in place since October.
Finally, for most of the year Utilities have been uncharacteristically weak given the bearish economic and market environment. However, over the last couple of weeks, we have seen an uptick in relative strength, which is not necessarily something that the bulls should hope for.
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