From time to time we will publish an article reviewing the offensive and defensive sectors of the S&P 500. It has been said that the consumer discretionary, financial, and technology sectors are three of the most important sectors in the stock market. Professional investors like to review these sectors due to their sensitivity to the economy and as a gauge of investors’ appetite for risk.
Over the past month (23 days), three of the four offensive focused sectors have outperformed the broad S&P 500 as shown in the below chart (when the bars are positive the sector is outperforming the S&P 500).
When we step back a bit further and look at the year-to-date figures we continue to see three of the four offensive sectors are outperforming. What is different in this chart is that technology, not financials, have been the lagger of the group.
While there are many conclusions that can be drawn from these charts, the one overriding theme we would like for you to take away from this analysis is that when offensive sectors are leading the broad S&P 500, it is likely (based on our analysis) that there is the potential for the current bull market to run higher from here.
As always, if and when the facts change – so shall we.