by Bespoke Investment Group
Typically when we look at the relative strength of sectors, we compare the performance between a sector and the S&P 500 over a period of months or years. While this is generally the preferred way to look at relative strength, it does have its shortcomings. For example, if a sector has a big move on one day, that day's move will skew the overall relative strength measurement for as long as the day is included in the time frame analyzed. It's a minor issue, but one worth noting nonetheless.
With that in mind, we analyzed the relative strength of sectors using a slightly different approach. In this method we looked at the number of days (in percentage terms) over a 50-day rolling period where a sector's single-day return was greater than the one-day return of the S&P 500. In the charts below, we have provided the relative strength charts under this method for each of the ten S&P sectors. For each chart, high readings indicate that the sector has frequently outperformed the S&P 500 on a daily basis, while low readings imply that the sector routinely underperforms the S&P 500 on a daily basis.
Interestingly, as of today eight sectors have outperformed the S&P 500 on a daily basis at least 50% of the time over the last 50 trading days. The only two sectors that have underperformed the S&P 500 more often than they have outperformed are Financials (38%) and Technology (32%). However, given the fact that these are the two largest sectors in the market, any weakness certainly makes its presence felt. While Technology currently has the weakest frequency of outperforming the S&P 500 over the last 50 days, Energy and Health Care are tied for the highest rate of daily outperformance at 62%.
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