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. This week, we also added a chart of the relative strength of the Transportation sector versus the S&P 500. While it has not been considered an 'official' sector since 2001, we thought readers would be interested in seeing the chart given the recent attention on the sector in the face of higher oil prices.
One of the main trends we've been highlighting over the last several weeks is that even with heightened concerns over the economy, defensive sectors such as Consumer Staples, Health Care, Telecom Services, and Utilities are all underperforming the S&P. At the same time, cyclical sectors such as Consumer Discretionary, Energy, Industrials, Materials, and Technology are all either holding up well or outperforming. Finally, the Transports have been one of the strongest groups in the market, even though their largest cost (oil) has been hitting record highs practically every day.
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