Season finale for the Stock Market and what a year it’s been. Choppy I think is the word that best describes it.
[chop-ee] adjective, -pi·er, -pi·est.
3. uneven in style or quality or characterized by poorly related parts
Yup that sounds about right. The stock market was certainly all of those things. But there were trends in place that worked all year long. The chart below shows the performance of each of the S&P Sector SPDRs relative to the S&P500. Notice the out-performance of the defensive sectors led by Utilities, followed by Consumer Staples and Healthcare.
On the flip side, you could have been short financials or Materials relative to the S&P500 and done very well. There is always a trend somewhere and in choppy environments like this, there were plenty of relative trends to be found.
Strength in defensive names isn’t what you want to see if you think the US equities market is going much higher. I would be looking for a shift in leadership for a sign that things actually have changed for the better. Sector rotation in important in a bull market. We’ve been waiting all year for new leaders and they have yet to arrive. Watch the Consumer Discretionary names going into the new year as the Retail sector makes new highs.
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