The Strongest Sectors and Impact on Stock Market

Which of the nine major sectors is currently the strongest, which is the weakest, and what does that say about the likely future of the stock market?


By Corey Rosenbloom

Let’s take a look.

The simple price comparison charts above – noting trend – highlight the nine main AMEX Sector SPDRs.

We use this as the basis of our “Money Flow” or Sector Rotation style of analysis.

Retirement Day Trader - eBook

Sign up for our Newsletter & get the FREE eBook
Retirement Day Trader:
How to Sell Weekly Options for Steady Income

  • This field is for validation purposes and should be left unchanged.

The strongest sector – making fresh new 2016 highs – is Utilities (bottom right).

The weakest sectors include “Offensive” or bullish sectors Financials (NYSEARCA:XLF) and Cyclicals (NYSEARCA:XLY).

Energy is the most persistently weak sector (NYSEARCA:XLE) while Industrials, Materials, and Health Care are all pushing new swing lows as well.

Technology – hit by large losses in leading names lately – also pushes to new swing lows.

Here’s another perspective of the Sector Rotation Grid:

In general, it’s broadly bullish for the overall market when “Risk-On” Sectors (Technology, Financials, Discretionary) are trending higher and outperforming “Risk-Off” or defensive sectors like Utilities and Consumer Staples.

Like the broader trends in money flow (bullish Treasuries and bullish gold), we’re seeing ongoing “Risk-Off” or defensive behavior on the Sector Rotation charts.

That’s not giving us bullish confidence for the future (bullishness) of the US Stock Market.

Continue monitoring strength and weakness on the sector grid in terms of “Risk-On” and “Risk-Off” groups.