Sector Returns off March Lows to Present

Apr 12, 2009: 8:10 PM CST

Earlier, I mentioned the AMEX Major Sector Returns (performance) from the start of 2009, but now let’s focus specifically on sector returns (rotation) off the March 6th lows to get a more recent picture.

We see a very similar picture as the 2009 returns to date, with strength coming from the “offensive” or “risk-seeking” sectors (Financials, Retail/Discretionary, Technology) and relative weakness coming from the “Defensive” or “risk-averse” sectors such as Consumer Staples, HealthCare, and Utilities, although all sectors have put in a positive return off the lows.  The S&P 500 has increased more than 20%.

To look at relative strength (to the S&P 500), I’ve drawn a red horizontal line across the chart so you can see which sectors have outperformed (Financials, Retail, Industrials, Materials) the S&P 500 and which have under-performed (Energy, Staples, HealthCare, Utilities).

Such action is what you want to see underpinning a Bull Market with strength in the risk-seeking sectors, which could be a sign of confidence from the “Big Money” players and funds who are anxious to get exposure to the stock market and pocket the quickest returns.

I wanted to draw your attention as well to Dr. Steenbarger’s similar post entitled “Sector Update for April 12th” in which he states:

“[Strength in Technology and Consumer Discretionary is] suggesting that investors are betting on growth and economic recovery.

As long as pro-risk themes are dominating… it is premature to fade this rally for anything less than a short-term trade.”

Looking beneath the market to specific Sector Returns, particularly using the Sector Rotation Model, can give you insights that you’ll miss just by looking at the major indexes themselves.

Corey Rosenbloom
Afraid to Trade.com

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2 Comments

2 Responses to “Sector Returns off March Lows to Present”

  1. mark Says:

    corey, are they buying all the dips or what? what are you trading today? thanks , mark

  2. Corey Rosenbloom Says:

    I’m mainly an intraday futures trader, very short-term in nature.

    Every dip so far has been bought, much to the bears’ dismay. It seems like a game of musical chairs, or ‘how far can the market go before a meaningful correction?’