PerfCharts Show the Tectonic Shift from Defense to Offense

There were concerns a month ago when the defensive sectors were leading the market, but this changed as the offensive sectors took control over the past month. The defensive sectors include healthcare, consumer staples and utilities. The offensive sectors include technology, consumer discretionary, industrials and financials. Chartists can use PerfCharts with different date ranges to spot shifts in sector rotation. The first PerfChart shows the percentage change for the nine sector SPDRs from mid March to mid April. Chartists can set a past date range by right clicking on the date slider to select one month and then dragging the slider to the left. Notice that the three defensive sectors were up sharply during this period. In contrast, three of the four offensive sectors were down. The Consumer Discretionary SPDR (XLY) gained, but this gain was a paltry .47%, and the sector still showed relative weakness.

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The second PerfChart shows these same nine sectors from mid April to mid May. Notice that the four offensive sectors are up more than 8% and seriously outperforming the defensive sectors. Relative strength in these offensive sectors reflects a strong appetite for risk and this is healthy for the market. It is also positive to note that the Energy SPDR (XLE) and Materials SPDR (XLB) are also showing upside leadership. These two sectors are also considered "cyclical" because they perform best when the economy is expanding.

Good charting!
--Arthur Hill CMT
Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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