Current Sector Returns to Date

Let’s take a quick look at the nine major AMEX Sector SPDRs to determine what’s happened so far in 2008:

With the S&P 500 down 10.5% for 2008, only two sectors have performed worse than ‘the market:’

Technology has fallen almost 16% for the year (thanks to Google, Apple, and others – who may be staging a comeback)
Financials has fallen just over 14% for the year (not surprisingly)

Which sector has held up the best in terms of relative strength (though still losing actual value) for 2008?

The Consumer Staples has managed to slide only 2.5% while
Materials has fallen just over 3% for the year.

It makes sense that the Consumer Staples Sector would show the strongest relative strength, due to the fact that major funds that must be ‘long’ the market often rotate here when they see signs of economic hardship ahead. Consumers still must buy cleaning supplies, tobacco, and a variety of other ‘necessities’ no matter how gloomy the economic situation deteriorates.

Speaking of relative strength, let’s view a chart of the relative performance (to the S&P 500) of each of these sectors:

Again, only the Financials and Technology Sectors have fared poorer than the overall market.

Knowing which sectors are showing relative strength (or weakness) can set up profitable trading opportunities, as well as clue you in to the overall picture.