Overtime

Sector Trends

Good morning,

This week we’re doing a sector review with a focus on a new systematic scoring system. You’ve seen me break out these moving average charts that show the slope of the 1, 3, 6, and 12-month moving averages, and now I’m applying a simple scoring method to it to help quantify where the trends for the 11 S&P 500 sectors are.

The system is simple: For each sector, one point is awarded for each of those moving averages with a positive slope. We’ll look at the absolute and relative charts for each and total them up for a potential high score of 8. A sector with all four moving averages in decline in absolute and relative terms would, in theory, score 0.

Below those sectors are ranked, and I’ll provide some additional thoughts throughout.

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Technology: 7

Tech is our leader, with only the 3-month slope of the XLK:SPY ratio currently negative. After a brief correction, the one-month slope is back to positive in absolute and relative terms and long-term trends remain bullish.