All of the S&P 500 index equity sectors are higher since the last update 4 weeks ago, except for Utilities. All equity sectors are positive for the year, but the return differential from the best to worst performing sector is now even more noticeable as the end of the year approaches.
The TradeStation chart shows the Normalized Relative Strength Score (NRSS)* for roughly the last 3 years, while the table shows year-to-date returns in order to compare the sector rotation moves to actual returns. From the top to the bottom of the TradeStation chart, a general reading of the indicator shows that the Consumer Discretionary sector (XLY) remains on top, but the sector actually swapped places with Healthcare (XLV) in actual year-to-date returns. As a reminder, XLY has been the biggest sector rotation surprise in the last few years by defying gravity for a prolonged period of time (see red line in the chart). Notice that the line continued to turn slightly down since the last update, which may be worth keeping an eye on going forward. Healthcare (XLV) and Financials (XLF) outperformed since the last update, but notice that the NRSS readings for those two sectors are turning over as well.
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Written by Frederic Palmliden, CMT, Senior Quantitative Analyst, TradeStation.