The charts below show the relative strength of the ten S&P 500 sectors versus the overall index during the last year. Â In addition to the ten sectors, the bottom two charts also show the relative strength of the Transports and the Russell 2000 versus the S&P 500. Â When the line is rising it indicates that the sector is outperforming the S&P 500, while a falling line indicates underperformance. Â 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.
Over the last twelve months, five out of ten sectors are outperforming the overall index while five are underperforming. Â Sectors outperforming by the widest margin include Financials, Consumer Discretionary, and Health Care. Â On the downside, the biggest underperformers over the last year have been Technology, Materials, and Energy. Â The weakness in Technology is largely AAPL related as that stock's large weighting in the sector has acted as an anchor. Â While the Industrials sector has underperformed over the last year, in the last four months the sector has really staged a turnaround as its exposure to international markets has been a positive since the election.
Finally, like the Industrials sector, Transports and the Russell 2000 have both underperformed the S&P 500 over the last year, but both indices have also seen steady outperformance since last Fall. Â Many investors like to see confirmation of a rally or decline on the part of either the Transports and/or the Russell 2000. Â With that in mind, the outperformance we have seen over few months is music to the bulls' ears.