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Sector Analysis: Healthcare Driven By Seasonality, Transports Nearing Support – Week Ending Jan 6, 2017.

|Includes: IYT, XLB, XLE, Financial Select Sector SPDR ETF (XLF), XLI, XLK, XLP, XLU, XLV, XLY

Weekly Sector Recap

The defensive posturing that was seen going into yearend quickly turned bullish during the first trading week of 2017. All four of the economically-sensitive sectors finished strong - Cyclicals, Technology, Industrials, and Financials. Those four are the aggressive sectors - highlighted in the following chart - which need to show leadership to keep a bull market alive…

Healthcare (NYSEARCA:XLV) finished the week as the strongest SPDR sector on both an absolute and relative basis. December and January are historically strong months for Healthcare. Cyclicals and Technology tend to lead in January on a historical basis. That is exactly what we saw last week…

For additional background on sector relative strength, broken out by month, please read Tom Bowley's blog post over at StockCharts.com. An insightful article…

Healthcare Sector Seasonality

As discussed in the previous week's Instablog, Healthcare is a potential value play going into 2017. The other tailwind supporting the Healthcare sector is its seasonality trend. Historically it has its best month in December on an absolute basis, and its best month in January on a relative basis. See the following two charts…

Transportation Index Update

In the November 4th Instablog, it was highlighted that the Transportation Index had been demonstrating relative strength since August 2016. The same was true for the Railroad Index, which serves as underlying indicator for economic and industrial U.S. growth.

The following is an updated version of that weekly chart. It shows that Transports have been weakening on a relative basis since early December, but holding support. On an absolute basis the trend is still positive for Transports. It is still above its 10-week moving average. It bears watching though for any signs of further weakening…

Thanks for the read…

Previous Instablog's for Reference:

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

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.