Sector Relative Strength

With the Third Quarter coming to a close, we thought now is as good a time as any to review the relative strength of each of the ten S&P 500 sectors versus the S&P 500. In the charts below, a rising line indicates the sector is outperforming the market, while a falling line indicates that the sector is underperforming. Charts shaded in red indicate that the sector’s performance over the last year has lagged the S&P 500, while green indicates that the sector has done better than the overall market. For example, the chart of the energy sector is shaded in red which indicates that energy stocks have underperformed the market over the last year (Wasn’t it only a few months ago that the world was running out of oil, and that oil was going to $100 a barrel? Oh my how times have changed!)

Given the weakness we have seen in energy commodities over the last several weeks, we also noted on each chart where oil made its double top in August. This should help investors gauge which sectors have benefited (Consumer Discretionary and Technology) and which have been hurt the most (Energy, Utilities, Materials, and Consumer Staples) from the fall in oil. If oil continues to decline, these sectors should continue to benefit and if it reverses higher, expect the opposite to occur.