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Sector Analysis: Defensive Sectors Are Relative Leaders Entering 2017 – Week Ending Dec 30, 2016.

|Includes: IWD, IWF, XLB, XLE, XLI, Technology Select Sector SPDR ETF (XLK), XLP, XLU, XLV, XLY

Weekly Sector Recap

It was a poor finish for the last week of 2016. All nine SPDR sectors ended in the red. Much of the underperformance can be attributed to a Holiday, low-liquidity, final week of the year, as well as a dose of tax-loss selling. All four of the economically-sensitive sectors finished in the bottom five…

The three weekly relative leaders were all defensive sectors -- Utilities, Consumer Staples (Cyclicals), and Health Care. In the two previous week's blogs, the relative weakness in the Consumer-Discretionary (NYSEARCA:XLY) / Consumer-Staples (NYSEARCA:XLP) ratio was highlighted. The concern over this relative weakness is it may be portending a more risk-off (defensive) market posture for the start of 2017. This trend appears to have continued during last week…

Monthly Sector Performance

On a monthly basis for December, the defensive posturing is also evident with Utilities and Consumer Staples being two of the four relative leaders. For the aggressive sectors, it was a split -- Financials and Technology were relative leaders, while Industrials and Cyclicals were laggards. It's worth noting that Cyclicals finished the month with a fractional gain. With that said, all nine SPDR sectors did finish positive on a monthly basis…

2016 YTD Sector Performance

For 2016, it was a bullish year overall -- only Health Care had a negative finish. The relative laggards were all defensive sectors…

2017 Preview: Value vs. Growth Performance

Barron's reported over the weekend that value is expected to outperform growth in 2017 (see "Up & Down Wall Street", Dec.31, 2016). The Russell 1000 Value (NYSEARCA:IWD) and the Russell 1000 Growth (NYSEARCA:IWF) ETF's were referenced in that analysis. The following relative-performance chart reinforces that analysis. It also highlights the strength of IWD (value) over IWF (growth), which actually began in February of 2016. The ratio has yet to eclipse its 2013 peak, so there is potential room to run…

Health Care's underperformance in 2016 may set it up as a value candidate going into 2017, more on that analysis in next week's blog…

Thanks for the read…

Previous Instablog's for Reference:

Sector Analysis: Is Defensive Posturing Starting To Develop?- Week Ending Dec. 23, 2016.

Sector Analysis: Trump Rally Extended & Cyclicals Sector Raising Caution Flag- Week Ending Dec. 16, 2016.

Sector Analysis: Trump Rally Resumes With Seasonality Tailwinds- Week Ending Dec 9, 2016.

Sector Analysis: Trump Rally Takes A Breather - Week Ending Dec 2, 2016.

Sector Analysis: The Trump Rally Was Telegraphed By The Transports - Week Ending Nov. 25, 2016.

Sector Analysis: Dow Transports Telegraphing Strength - Week Ending Nov. 4, 2016.