The charts below show the relative strength of the ten S&P 500 sectors as well as the Dow Jones Transports relative to 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.
As shown in the chart, six sectors have outperformed the S&P 500 over the last year. Over the last twelve months, the S&P 500 has been led essentially by Consumer Discretionary, Technology, and Utilities, which have seen the greatest outperformance. On the downside, sectors that have been weighing on the market include Energy, Financials, Industrials, and Materials. Of these four sectors, the Materials sector has shown some signs of a bounce in recent days, but at this point we would need to see further outperformance before becoming more confident on the sector's outlook.
With regards to the Dow Jones Transports, the sector has underperformed the S&P 500 over the last year, but in the last several weeks the sector's relative strength has been slowly trending higher. This is no doubt due to the big drop in the price of oil, but for all you Dow theorists out there, it is a bullish trend.
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