Normally, I provide a daily blog article every day that the U.S. stock market is open. That eliminates Saturdays and Sundays. I'm making an exception today to share some historical information that I believe you'll find useful as you work your way through 2017. Also, the following historical information will be a perfect lead in to a special webinar series that will begin next Saturday, January 14, 2017. Greg Schnell and I will be co-hosting "2017 Stock Market Outlook" at 11am EST, providing some of our best ideas for 2017. It's the first of a monthly series throughout 2017 where we'll look to provide education, timely commentary and delve into many of the useful tools and features at StockCharts.com. It's a benefit we're providing to subscribers here at StockCharts. There will be no charge for StockCharts.com members.
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Ok, let's take a look at a summary of how each sector ETF performs relative to the benchmark S&P 500 by calendar month. To highlight sectors of relative strength and weakness, the following spreadsheet is color coded. Have a look:
The numbers shown tell you whether a sector outperforms (green shaded) or underperforms (red shaded) the benchmark S&P 500 for that calendar month and by how much. For instance, on the top line the technology sector ETF (XLK) has outperformed the S&P 500 during January by an average of 1.2% over the last 20 years. Any monthly outperformance of 1.0% or greater has been shaded with dark green so that the very strong relative performance months really stand out. While I wouldn't necessarily use this to buy and sell ETFs throughout the year, I would use it as another indicator to determine which areas of the market I want to trade. As an example, healthcare (XLV) has its best relative months in December and January. Take a look at its performance over the past several weeks:
The strength since early December is obvious and now the XLV has made a nice trendline break to the upside. Technically, the sector appears much stronger and we know we're in a month where the XLV tends to outperform. Therefore, this is a space I'd look to for trading ideas. Biotechs ($DJUSBT) tend to be the best performing stocks within healthcare during January, so that's an area I'd consider.
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Happy trading!
Tom
