There are two main ways I view broad sector performance and compare results to determine where we may be according to the Sector Rotation Model. Here, I show those two methods.
Clicking on the AMEX Sectors launches a Java window with multiple, illegible lines on the graph. To get a clearer picture, you’ll need to click on the “Bar” graph option at the bottom left to make the comparison clearer (the tab has a green and red bar on it – see example below).
Right now, the chart looks like this:
The above chart assumes no modifications – what fun is that?!
There’s a little trick that you might miss when you’re looking at this chart. What you’re actually viewing is RELATIVE performance over the last 65 days (time frame is scaled and adjusted on the bottom right of the chart – right click to adjust).
The reason it’s relative is that you’re comparing performance to the S&P 500 Index (which is ‘zeroed’ and sector performance is shown above or below the performance of the S&P). That’s great for comparison purposes, and gives good insight into what sectors are outperforming or underperforming the S&P 500 for the given time period (perhaps year to date, monthly or weekly comparison).
Right now, Health Care and Consumer Staples have outperformed all other sectors over the last 3 months. That’s useful information.
However, what if we want to know ABSOLUTE performance of the sectors?
We’ll need to click the S&P 500 (the red box at the top left) to compare to absolute performance (in other words, what exact percent has the sector moved in the given period we’re examining). This chart pops up.
I’ve actually changed the time scale in this chart (by right-clicking on the ‘days’ tab) to show “Year-to-Date” performance of all AMEX Sectors.
We see that the Financial sector has underperformed all others (losing 25%), followed by Technology (losing 14%) so far this year. None of the sectors at this time are positive for the year (which may be surprising to you, given the attention energy stocks have received).
Again, you can change the time scale to reflect weekly performance, or you can scale it back to the October peak and see performance from there. To do so, left click and hold on the left side of the “days” bar to change the size and scale of the chart.
You can also click in the middle and drag the entire bar to go ‘back in time’ and see what the performance was for the scale you chose – this can be an interesting exercise in seeing how money flows from sector to sector over time, and what that might mean for the broader market and economy.
Play around with this useful and free tool to see what insights you might gather about the current and past sector rotation that has occurred!