S&P 500 Sectors Relative Strengths
Chart 1
Chart 2
Two Sectors Outperforming Broader Index
Two of the S&P 500 sectors, $XLK (Second Panel Chart 1) and $XLF (Fifth Panel Chart 2), are out-performing the index. $XLK is doing better than the index since April 2016 and $XLF is doing better since June 2017. $XLF outperformed S&P 500 from July 2016 to December 2016 and then underperformed it till June 2017.
Four Sectors Performing As Well As S&P 500
Two sectors, $XLB (Fifth Panel Chart 1) and $XLI (Sixth Panel Chart 1). Are mostly tracking the performance on S&P 500. Since April 2016, the ratio of $XLB to $SPX, is moving within a narrow horizontal range, indicating not much difference in their return over this period. The ratio of $XLI and $SPX is within a similar range since November 2016.
Performance of two defensive sectors, $XLU and $XLV, compared to the index is similar. $XLU underperformed $PSX from July 2016 to February 2017 (First Panel Chart 2). Since then it has tried to recover but its trend is mostly similar to that of $SPX.
$XLV mostly underperformed $SPX from July 2015 to February 22017 (Second Panel Chart 2). Since then its trend is similar to that of $XLU.
Four Sectors Are Underperforming
$XLE is underperforming &$SPX since 2011 (First Panel Chart 1). It tried to recover in 2016 only to extend the underperformance.
$XLY (Third Panel Chart 1) is mostly doing worse than $SPX since October 2015, $XPY (Third Panel Chart 2) since February 2016 and $XLRE (Sixth Panel Chart 2) since July 2016.
Sectors That Are Doing Better
Finance – XLF
Chart 3
$XLF is attempting to break above a double top/horizontal channel (Chart 3). In August 2016, it broke above a symmetrical triangle.
The 100% extension target of the triangle was achieved in February 2017. The 161.8% extension target is near 28.54, which is 12.5% away from current level.
If $XLF is successful in break above the emerging horizontal channel/double top pattern then the 100% extension target will be near 27.68, which is 9.1% away from current level.
The top ten best performing components of $XLF over previous three-month period are:
- $AMP – Ameriprise Financial Inc
- $CINF – Cincinnati Financial Corp
- $TROW – T Rowe Price Group Inc
- $ETFC – E*TRADE Financial Corp
- $AMG – Affiliated Managers Grp
- $PGR – Progressive Corp
- $HIG – Hartford Finl Services Group
- $BBT – BB&T Corp
- $UNM – Unum Group
- $MCO – Moody’s Corp
Technology – XLK
Chart 4
Technology has been mostly out performing, S&P 500 since mid-2013 (Chart 4). During this period, on few occasions it was laggard for handful of weeks. Latest such episode started in late-May. Since late-July, the ratio, XLK/$SPX, is rising again, though it hasn’t gone above the high of May 2017. If XLK rises above 58.20, then it is very likely to resume the leadership.
The top ten best performing components of XLK are:
- $NVDA – Nvidia Corp
- $XRX – Xerox Corp
- $FB – Facebook Inc A
- $PYPL – PayPal Holdings Inc.
- $GPN – Global Payments Inc.
- $TSS – Total System Services Inc.
- $VZ – Verizon Communications Inc.
- $HPQ – HP Inc.
- $EA – Electronic Arts
- $ATVI – Activision Blizzard Inc.
Sectors That Are Improving
Energy – XLE
Chart 5
$XLE, is in a downtrend since mid-December 2016 (Chart 5). In late July 2017, it broke above a down trend line. On daily timeframe, $XLE has made made bullish RSI divergences three times in June and July 2017.
However, the sequence of lower highs and lower lows, that it started to make since December 12 2016 has not yet broken. For that to happen the price has to break above 67.12before it break below 63.29. If that happens that it may start to outperform S&P 500.
Most of the components of $XLE have similar charts. Some that are showing improved price patterns are:
- $EQT (EQT Corporation)
- $MUR (Murphy Oil Corp)
- $OKE (ONEOK Inc)
- $CVX (Chevron Corp)
- $KMI (Kinder Morgan Inc)
Real Estate – XLRE
Chart 6
The ratio, XLRE/$PSX is forming a symmetric triangle since March 2017 (Chart 6). The ETF itself has been rising November. If the ratio break above the triangle then it will start to outperform the broader index. The top best performing components of XLRE are:
- $MAA – Mid-America Apt Communties
- $ESS – Essex Property Trust
- $PLD – ProLogis Inc.
- $UDR – UDR Inc.
- $ARE – Alexandria Real Estate Eqty.
- $DLR – Digital Realty Trust
- $EQR – Equity Residential
- $AMT – American Tower Corp A
- $HST – Host Hotels & Resorts Inc.
- $EXR – Extra Space Storage Inc.
Industrials – XLI
Chart 7
The Industrial have been performing, generally, as well as S&P 500 since November 2016 (Chart 7). The ratio, XLI/$SPX has formed a horizontal channel over this period. The bias is for a breakout to the upside. The tope performing components are:
- $FDX – FedEx Corp.
- $KSU – Kansas City Southern Inc
- $ DAL – Delta Air Lines
- $BA – Boeing Co
- $MMM – 3M Co
- $TDG – TransDigm Group
- $MAS – Masco Corp
- $DE – Deere & Co$
- XYL – Xylem Inc
- $ITW – Illinois Tool Works Inc
