- Energy and Information Technology are at the top of the relative strength rankings. The industry group heat map confirms this strength with Energy and Semiconductor groups (up and down the cap scale) accounting for five of the top ten spots in the industry group rankings.
- Relative weakness can be found in Utilities, Consumer Staples and Health Care, trends that are echoed in both our sector rankings and the industry group heat map.
[PLUS] Weekly Market Notes & Breadth Trends
- Consumer Discretionary has been the top-performing large-cap sector on a short-term basis and was one of only two large-cap sectors to make new highs last week (Information Technology was the other). The sector’s relative strength at the large-cap level is not echoed among mid and small-caps, but it is still fairly broad-based (it’s equal-weight ranking matches its cap-weight ranking).
- Energy and Financials have lagged on a short-term basis, but remain at the top of our relative strength rankings across size levels.
[PLUS] Weekly Market Notes & Breadth Trends
- 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.
[PLUS] Weekly Market Notes & Breadth Trends
- 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.
[PLUS] Weekly Market Notes & Breadth Trends
- If shopping in the Energy (or Consumer Discretionary) sectors, look in the mid-cap aisles. The Energy sector is near the bottom of the large-cap sector rankings, but at the top of the mid-cap rankings.
- Improving relative strength trends for large-cap Food & Staples Retailing and Utilities bear watching as index-level volatility picks up.
[PLUS] Weekly Market Notes & Breadth Trends
- 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.
[PLUS] Weekly Market Notes & Breadth Trends
- 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.
[PLUS] Weekly Market Notes & Breadth Trends
- 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.
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