• Paying attention to relative strength can help in two ways. It identifies leaders, to whom active investors can tilt toward, and laggards, from whom those same investors can tilt away. Up and down the size scale, Energy and Financials are leaders, while Utilities, Health Care and Consumer Staples are laggards.
•  At the industry group level, mid-cap groups are seeing improving relative strength, while large-cap groups are seeing their relative strength deteriorate.

[Read more…]

• Higher rates are fueling strength in Energy and Financials – leadership from those sectors can be seen across market cap levels.
• Our industry group heat map shows continued deterioration from large-cap groups and improvement from small-cap groups. Some 8% of large-cap groups made new 13-week highs last week vs 42% that made new 13-week lows. Among small-cap groups, it was 17% at new highs and only 13% at new lows. 

[Read more…]

• The Real Estate and Health Care sectors are relative strength leaders up and down capitalization levels. The Consumer Staples sector is a relative laggard across the cap scales.
• Health Care strength can be seen on the industry group heat map with positive readings for the Pharma, Biotech & Life Sciences group. While the Consumer Staples sector is weak overall, the large & mid-cap Food & Staples Retailing groups are improving.

[Read more…]

• The Financials sector bounced back in the rankings last week, climbing three spots and moving into the second spot overall. Strength within the sector is broadly based as it is at the top of the rankings from an equal-weight perspective.
• Thanks to FB and GOOGL, the Communication Services sector is in the top spot on a cap-weight basis. On an equal-weight basis it ranks below everything except Consumer Staples.
• At the large-cap level, Transports are near the bottom of our industry group rankings. Mid-caps however, are showing strength and small-caps are improving. 

[Read more…]

• We saw plenty of volatility in the weekly rankings last week (e.g., Health Care rising from #6 to #2, Financials dropping from #1 to #5) but some underlying trends remain intact: Cyclicals (especially outside of Financials) are lagging and the Communication Services sector may not be quite as strong as its current ranking suggests (on an equal-weight basis, it’s ahead of only Energy).
• The Industry Group heat map shows nine of the top ten groups are either large-cap or mid-cap groups (mostly large-cap). Nine of the bottom ten groups are either small-cap or mid-cap (mostly small-cap). More on this later.

[Read more…]

• With a handful of mega-caps driving index-level returns, we want to see sector-level leadership confirmed by similar sector strength on an equal-weight basis, as well as further down the capitalization scale.
• Financials are the top-ranked sector in our rankings on both a cap-weight and equal-weight basis. Strength fades among mid-cap and small-cap Financials. Real Estate remains a leader across the board from a weighting and size perspective, though it has slipped on a short-term basis.  

[Read more…]

• Financials have quietly maintained a spot in the sector leadership group based on our relative strength rankings. They have been in the leadership group since November and have been the top-performing sector over the past year.
• The discrepancy in between the cap-weighted and equal-weighted rankings for the Discretionary and Communication Services sector puts on display the impact a handful of mega-caps can have on sectors (and indexes). Without the impact of FB and GOOGL, Communication Services would be one from the bottom rather than one from the top. The inverse is true with respect to Consumer Discretionary and AMZN.

[Read more…]