This is a big topic of conversation these days. Everyone seems to be a rotationista. But we are indeed seeing it happen.
As was well documented, the defensive names had been leading this market throughout 2013. But look at what’s happened over the past month. During the most recent leg of this rally, the Utilities, Consumer Staples and Healthcare have all underperformed S&Ps. Meanwhile, it’s been Materials and Energy that have led the way. This is a chart showing the relative performance of each S&P sector going back to mid-April:
The Cyclicals have done their part all year and continue to do so. Cyclicals are now the 2nd best performing sector for the year, behind only Healthcare. I think this is a very good thing for markets. But outside of Cyclicals, let’s see if the continued rotation into these resource names keeps helping S&Ps grind higher.
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