A Tale Of Two Sectors

Includes: SPY, XLF, XLK
by: Bespoke Investment Group

It was the best of times, it was the worst of times. During the month of October, the technology and financial sectors took two divergent paths. Financials rose 1.81% while technology fell 6.81%. As shown in our trading range charts of the two sectors below, the financial sector remains above its 50-day moving average and in a nice uptrend. The Technology sector is in extreme oversold territory at more than two standard deviations below its 50-day.

Click to enlarge

You can see the divergent paths between tech and financials in relative strength charts (vs. the S&P 500) as well. As shown, aside from a brief bounce during the summer, tech has now been underperforming the overall market significantly since the end of the first quarter. The financial sector has been outperforming for a large majority of the year.