By Gary Gordon of
But I digress. I intended to focus on specific sectors that should outperform going forward. So let's take a look at the three-month sector leaders. Why the best three-month performers? The stock market is a forward-looking beast. It had already anticipated Republican victories in Congress as well as the likely tax extension that is being proposed today. So the last three months give a pretty good peek at how Sector ETFs may respond to the anticipated, ongoing improvement of employment numbers and the expected GDP growth gains.
Economically cyclical stocks have handily led the last three months. Moreover, if tech, energy and consumer discretionary stocks continue leading the way through the end of Q1 2011, it would signal an expectation that the U.S. economy may be on solid ground for Q2 and Q3. The mere fact that defensive equities like staples, utilities and health care are bringing up the rear suggests that investors expect corporations to keep producing earnings, consumers to keep spending and businesses to potentially ramp up hiring. Lack of interest in SPDR Financials ( XLF), however, represents another thorn in the paw of bulls. Normally, its leadership represents increased lending activity and increased investment activity. Its present lack of leadership should be watched closely.
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