U.S. Sector Overview

by: Bespoke Investment Group

Here at Bespoke, we strive to provide information in the most clear and concise manner possible. To that end, we're always looking for ideas as to how to display data in a way that viewers can grasp the most possible information in as short a time as possible.

One source we have found to be extremely useful is Edward Tufte's most recent book, Beautiful Evidence. For those who are unfamiliar with his work, Tufte has published several books on analytical design, and he is considered as one of the experts in the field. One of the ideas we have adapted from Tufte's most recent book are Sparklines, which are what he calls "small, high resolution graphics embedded in a context of words, numbers, images."

In the table and charts below, we summarize the historical trading ranges of the S&P 500 and its ten sectors. Currently, no sectors are oversold, while five sectors are overbought (Column 2). We also highlight each sector’s correlation with the S&P 500 over the last year (Column 3). As shown, the only sector that has had no positive correlation to the S&P 500 over the last year is Energy. Sectors that have been the most positively correlated to the market include Telecom Services (0.96), Financials (0.88), and Consumer Discretionary (0.86).

For each sector, we have also provided a chart showing the daily readings of the sector’s price versus its 50-day moving average over the last year. On each chart we also include the dates when each sector hit its most overbought and oversold levels over the last year. These charts allow readers to quickly and easily assess any relationships and patterns between sectors.

One notable aspect of the relationship between the sectors is how the chart of the Industrial sector has been ticking lower, even as the rest of the market has recently been rising. Part of the reason for this is due to GE's large weight in the sector (even though its industrial related units make up less than half of its revenues), and the stock's big earnings miss on April 11th. Even still, given its large exposure to international markets and the so-called infrastructure play, shouldn't this sector be leading instead of lagging the market?

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