S&P 500 Sector Strength Confirms Broad Market Rally

Utilities Sector (NYSEARCA:XLU)

Utilities ($XLU) has been one of the stronger performing sectors YTD, clearing its 2015 high back in May. It’s A-D Line has created almost a straight line higher as individual utility names retain their up trends.

s&p 500 sector strength xlu utilities market breadth_july 2016

Health Care Sector (NYSEARCA:XLV)

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The Health Care ($XLV) sector still sits below its high but has recently broken above a level of resistance around $73. The A-D Line for the sector has been leading price higher, having already made a new high.

s&p 500 sector strength xlv health care market breadth_july 2016

Consumer Discretionary Sector (NYSEARCA:XLY)

The Consumer Disc. ($XLY) sector is just under its prior high but its breadth has already broken out.

s&p 500 sector strength xly consumer market breadth_july 2016

As you can see, from a market breadth perspective using the S&P 500 sector’s individual Advance-Decline Lines, the market appears to be much healthier than what the macro economists would lead you to believe. I understand profit margins are contracting, margin debt is high, Europe is falling apart, etc… But there is a difference between economies and markets, and we’re seeing a clear separation when looking at S&P 500 market breadth. And we’re seeing much of the same thing when looking at S&P 500 sector strength and respective breadth indicators.

While it’s possible we see the market digest these gains and see some type of back-filling, it’s hard to argue that the current up trend is anything but strong based on the underlying market breadth strength across the S&P 500 sectors.

Thanks for reading and have a great rest of your week.

The information contained in this article should not be construed as investment advice, research, or an offer to buy or sell securities. Everything written here is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned.


Twitter: @AndrewThrasher

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.